The effect of audit quality offered by audit firms on client satisfaction , luận văn thạc sĩ

UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Hoang Thi Kim Thuan THE EFFECTS OF AUDIT QUALITY OFFERED BY AUDIT FIRMS ON CLIENT SATISFACTION MASTER OF BUSINESS (Honours) Ho Chi Minh City – 2014 UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Hoang Thi Kim Thuan THE EFFECTS OF AUDIT QUALITY OFFERED BY AUDIT FIRMS ON CLIENT SATISFACTION MASTER OF BUSINESS (Honours) SUPERVISOR: Dr Nguyen Thi Nguyet Que Ho Chi Minh City – 2014 INDEX ACKNOWLEDGEMENTS LIST OF FIGURES LIST OF TABLES LIST OF ABBREVIATION ABSTRACT CHAPTER 1: INTRODUCTION 10 1.1 Background to the research 10 1.2 Research motivation 12 1.3 Research objective 13 1.4 Research scope and methodology 14 1.5 Structure of the study 14 CHAPTER 2: LITERATURE REVIEW 15 2.1 Introduction 15 2.2 Audit quality 15 2.2.1 Definition of audit quality 15 2.2.2 Research on measurement of audit quality 16 2.3 Client satisfaction 19 2.4 Research framework and hypothesis development 20 2.4.1 Audit quality dimensions and client satisfaction 20 2.4.1.1 Reputation and client satisfaction 21 2.4.1.2 Capability and client satisfaction 21 2.4.1.3 Expertise and client satisfaction 22 2.4.1.4 Experience and client satisfaction 23 2.4.1.5 Responsiveness and client satisfaction 23 2.4.1.6 Client service and client satisfaction 24 2.4.1.7 Empathy and client satisfaction 24 2.4.2 Research framework 25 2.5 Conclusion 26 CHAPTER 3: METHODOLOGY 27 3.1 Introduction 27 3.2 Research process 27 3.3 Questionnaire development 28 3.4 Pilot study 32 3.5 Main study 33 3.5.1 Sampling method 33 3.5.2 Sample size 33 3.5.3 Questionnaire design and administration 34 3.6 Data analysis method 35 3.7 Conclusion 36 CHAPTER 4: DATA ANALYSIS 37 4.1 Introduction 37 4.2 Sample description 37 4.3 Reliability Analysis 38 4.4 Exploratory factor analysis (EFA) 40 4.5 Hypotheses testing 42 4.5.1 Pearson Correlation Coefficient 42 4.5.2 Testing assumptions of Multiple Regression 44 4.5.3 Regression analysis 45 4.6 Discussion of research findings 47 4.7 Conclusion 48 CHAPTER 5: CONCLUSION AND IMPLICATION 50 5.1 Conclusion 50 5.2 Managerial implications 50 5.3 Limitation and suggestion for future research 52 REFERENCES 53 APPENDIX 60 Appendix A: The findings of pilot study 60 Appendix B: Questionnaire (English version) 65 Appendix C: Questionnaire (Vietnamese version) 70 Appendix D: Descriptive Analysis 75 Appendix E: Total Variance Explained 77 Appendix F: Multiple Linear Regression Assumption testing results 78 ACKNOWLEDGEMENTS I would like to express my sincere gratitude to my supervisor, Dr Nguyen Thi Nguyet Que for her valuable guidance, insightful comments and continuous support to my thesis I am sure that this thesis would not have been possible without her supervision and constant help I would like to acknowledge with much appreciation to leaders, teachers, and staffs in ISB who help me usefully all the subjects of my master course I would like to thank my dear colleagues and friends for their invaluable advice, help, encouragement and support during the time I was doing this thesis Last but not least, a special thank goes to my husband who always stay with me in good and bad times His continuous support in pursuing my study is invaluable to me Ho Chi Minh City, February 22, 2014 LIST OF FIGURES Figure 2.1: Research model 25 Figure 3.1: Research Design Process 27 LIST OF TABLES Table 3.1: Draft questionnaire to measure audit quality 29 Table 3.2: Deleted items in pilot study 60 Table 3.3: Final questionnaire to measure audit quality 62 Table 3.4: Cronbach’s alpha reliability coefficient 35 Table 4.1: Sample characteristics 75 Table 4.2: Cronbach’s alpha reliability of first analysis 38 Table 4.3: Cronbach’s alpha reliability of final analysis 40 Table 4.4: EFA results 40 Table 4.5: Pearson Correlation 42 Table 4.6: Coefficients 44 Table 4.7: Regression results 45 Table 4.8: Hypotheses testing results 46 Table 4.9: The summary of hypotheses testing results 49 LIST OF ABBREVIATION AAA: American Accounting Association WTO: World Trade Organization VACPA: Vietnam Association of Certified Public Accountants CPA: Certificated Public Accountant CFO: Chief Financial Officer SSC: State Security Commission AASC: Auditing and Accounting Financial Consultancy Services Limited Company SPSS: Statistical Package Software for Social Science EFA: Exploratory Factor Analysis ABSTRACT Audit quality is crucial for financial market to function smoothly due to its effects on the credibility of financial statements The users of financial statements are more likely to feel secure about the information presented in the financial statements if the audit of the financial statements is perceived as high quality The current financial crisis and competitive business environment have brought on more challenges for audit firms They have confronted with the increasing pressure from financial statement’s users to improve audit quality To be successful in this environment, audit firms must continually strive to improve audit quality and hence, maximize client satisfaction This research aims at investigating the effects of audit quality provided by audit firms on client satisfaction in Vietnam In this study, the author uses AUDITQUAL model (Duff, 2004, 2009) focusing on seven dimensions of audit quality which were label Reputation, Capability, Expertise, Experience, Responsiveness, Client Service and Empathy and test the effect of each dimension of audit quality on client satisfaction An survey of 380 responses was conducted in the convenient method in Ho Chi Minh City, Dong Nai and Binh Duong Province A statistical package for social sciences (SPSS) version 20.0 was used to analyze the collected data Results show that seven dimensions of audit quality including Reputation, Capability, Expertise, Experience, Responsiveness, Client Service and Empathy associated positively with client satisfaction and Experience has the most influence on client satisfaction Keywords: Audit quality, AUDITQUAL, Client satisfaction CHAPTER 1: INTRODUCTION 1.1 Background to the research Service quality and client satisfaction are very important concepts that companies must understand if they want to remain competitive and grow (Angelova and Zekiri, 2011) In today’s global competitive environment, it is recognized that high quality service is essential for firms that want to be successful in their business (Parasuraman et al., 1998; Rust & Oliver, 1994) Therefore, service quality and client satisfaction become interesting research subjects in the marketing literature as well as in the reality In the auditing context, it is the same as other service industries that audit quality and client satisfaction are very important Higher audit quality provided by audit firms will lead to higher clients’ satisfaction and higher repurchase intentions After many well-known audit failures, such as: Arthur Andersen's audit failure at Enron, Deloitte and Touche’s audit failure at U.S Adelphia Communications, PricewaterhouseCoopers’s audit failures at Tyco, Ernst & Young’s audit failure at Heath South Corporation, KPMG’s audit failure at Xerox Corporation…, audit firms are more and more focusing on the audit quality in order to increase client satisfaction and repurchase intentions In Vietnam, joining in the WTO has created a lot of opportunities to develop Vietnamese economy In this process, investors require the financial information more accurate and explicit than ever before Accordingly, audit and non-audit services offered by audit firms are in great demand However, in recent years, there are many scandals in Vietnam financial market that led to the bankrupt of some listed companies and caused big losses for stakeholders, such as: cheating on financial reports of Bach Tuyet Cotton Corporation, giving unfaithful information and crucial 10 APPENDIX B: QUESTIONNAIRE – ENGLISH Dear Ladies and Gentlemen, 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 is designed to collect your opinion about the quality of audit service as well as your level of satisfaction towards the audit firm in the year 2012 Your contributions are valuable for me to complete 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 corresponding to: 1- Strongly disagree, 2- Disagree, 3- Neutral, 4- Agree, 5- S Reputation The audit firm is highly competent The audit firm operates to the highest standards of integrity The audit firm has rarely been found negligent in litigation against it – allegin inadequate audit performance The audit firm is objective The audit firm is conscientious The audit firm is credible to third parties The audit firm enjoys a good reputation The audit firm is independent of the board of directors Capability The engagement partner is highly competent 10 The engagement partner is actively involved in the engagement beginning wi initial planning and throughout the audit process 11 The engagement partner has financial statement users’ best interest at heart 12 The engagement partner is keen to understand what is happening within the client’s organization 13 The audit team staff are highly competent Responsiveness 14 The audit firm is willing to be flexible when scheduling the timing of audit vi 15 The engagement is easily contactable 16 The audit team develops stringent time budgets for each audit area and expec people to meet them Empathy 17 The audit team provides the client with personal attention 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 20 The engagement partner is pro-active and contributory (e.g suggests potentia acquisition targets) Client Service 21 The audit firm regularly conducts client service review meetings 22 The engagement partner arranges regular meetings with the client’s key staff identify issues of concern 23 The engagement partner regularly identifies examples of added value to the c 24 The audit team are willing to provide guidance on accounting principles 25 There is frequent communication between the audit team and executive management Expertise 26 The audit firm has other clients in the same industry 27 The audit firm undertakes research into the client’s industry 28 The engagement partner is very knowledgeable about the client’s industry 29 The senior manager and manager assigned to the audit are very knowledgeab about the client’s industry Experience 30 The engagement partner has been performing the audit for the past three year 31 The manager of the audit firm has been performing the audit for at least two y 32 The senior manager of the audit firm has been performing the audit for at leas years Client satisfaction 33 The overall client satisfaction with the audit quality offered by audit firms 67 Part II: General information How long has your company used the financial statement audit service of the audit firm? a year b years c years d Above years What is the business industry of your company? a Agriculture, forestry and fishing b Industry and construction c Trade and services 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 What is your position in the company? a General Director b Director/ Chief Financial Officer c Chief Accountant d General Accountant 68 e Accountant f Others How many year have you worked in the financial/ accountant field? a From 1-2 years b From 3-5 years c Above years THANKS YOU VERY MUCH FOR YOUR SUPPORT 69 APPENDIX C: QUESTIONNAIRE – VIETNAMESE BẢNG KHẢO SÁT Tôi tên Hoàng Thị Kim Thuận, học viên cao học Viện đào tạo quốc tế - Trường Đại học Kinh tế Thành phố Hồ Chí Minh Hiện thực đề tài nghiên cứu: Ảnh hưởng chất lượng dịch vụ kiểm toán đến hài lòng khách hàng (Tên tiếng Anh “The effects of audit quality offered by audit firms on client satisfaction”) Bảng khảo sát nhằm thu thập ý kiến đánh giá anh/chị chất lượng dịch vụ kiểm toán năm 2012, mức độ hài lòng anh chị với cơng ty kiểm tốn đánh giá Thơng tin đóng góp anh/ chị bảng khảo sát q báu để tơi hồn thành tốt luận văn Tôi đảm bảo thong tin dùng cho mục đích làm luận văn Xin chân thành cảm ơn hỗ trợ anh chị! Phần I: Đánh giá chất lượng dịch vụ kiểm tốn hài lịng khách hàng Anh chị đồng ý mức độ phát biểu đây, dựa thang điểm từ 1đến 5: Với 1- Hoàn toàn phản đối, 2- Phản đối, 3- Trung lập, 4- Đồng ý, 5- Hồn tồn đồng ý Danh tiếng cơng ty kiểm tốn Cơng ty kiểm tốn có lực tốt Cơng ty kiểm tốn tn thủ chuẩn mực cao tính trực Cơng ty kiểm toán làm việc cẩu thả để bị kiện tụng (Do kết kiểm tốn khơng thỏa đáng) Cơng ty kiểm tốn ln khách quan Cơng ty kiểm tốn ln tận tâm, chu đáo Cơng ty kiểm toán bên thứ tin cậy Cơng ty kiểm tốn có danh tiếng tốt Cơng ty kiểm tốn độc lập với Ban giám đốc Khách hàng Năng lực cơng ty kiểm tốn Partner phụ trách hợp đồng kiểm tốn có lực tốt 10 Partner phụ trách hợp đồng kiểm toán tham gia tích cực vào hợp đồng kiểm to lúc bắt đầu lập kế hoạch suốt trình thực kiểm toán 11 Partner phụ trách hợp đồng kiểm tốn ln cố gắng lợi ích ngư dụng báo cáo tài 12 Partner phụ trách hợp đồng kiểm tốn ln quan tâm tìm hiểu vấn đề c khách hàng 13 Thành viên nhóm kiểm tốn có lực tốt Sự đáp ứng nhiệt tình 14 Cơng ty kiểm tốn linh hoạt việc thiết lập lịch kiểm tốn 15 Khách hàng dễ dàng liên hệ với Partner phụ trách hợp đồng kiểm tốn 16 Nhóm kiểm tốn lập quỹ thời gian chặt chẽ cho nội dung kiểm toán vọng nhóm kiểm tốn phân bổ thời gian hợp lý Sự thấu hiểu 17 Nhóm kiểm tốn ln quan tâm hỗ trợ khách hàng 18 Partner phụ trách hợp đồng kiểm tốn quan tâm hỗ trợ Giám đốc tài khách hàng 19 Partner phụ trách hợp đồng kiểm tốn ln cố gắng lợi ích hàng 20 Partner phụ trách hợp đồng kiểm toán ln động có nhiều đóng góp ( dụ: gợi ý cơng ty mà khách hàng thâu tóm) Dịch vụ khách hàng 21 Cơng ty kiểm toán thường xuyên tổ chức họp đánh giá dịch vụ khách hàng 22 Partner phụ trách hợp đồng kiểm toán thường xuyên họp với nhân viên chủ ch khách hàng để xác định vấn đề cần giải 23 Partner phụ trách hợp đồng kiểm tốn ln cố gắng mang lại giá trị tăng thêm khách hàng 24 Nhóm kiểm tốn sẳn lịng hướng dẫn ngun tắc kế tốn 25 Nhóm kiểm tốn ban quản lý khách hàng giữ mối liên lạc thường xuyê Hiểu biết lĩnh vực hoạt động khách hàng 26 Cơng ty kiểm tốn có khách hàng khác lĩnh vực hoạt động 27 Cơng ty kiểm tốn có nghiên cứu tìm hiểu lĩnh vực hoạt động khách h 28 Partner phụ trách hợp đồng kiểm toán hiểu biết rõ lĩnh vực hoạt động k hàng 29 Kiểm toán viên kiểm toán viên tham gia vào hoạt động kiểm tốn hi biết rõ lĩnh vực hoạt động khách hàng Kinh nghiệm 30 Partner phụ trách hợp đồng kiểm tốn có kinh nghiệm kiểm tốn năm 31 Kiểm tốn viên có kinh nghiệm kiểm tốn năm 32 Kiểm tốn viên có kinh nghiệm kiểm tốn năm Sự hài lịng khách hàng 33 Cơng ty anh/chị hài lịng với chất lượng dịch vụ kiểm toán cung cấp c ty kiểm tốn Phần II: Thơng tin chung Doanh nghiệp anh chị sử dụng dịch vụ kiểm tốn báo cáo tài cơng ty kiểm tốn đánh giá rồi? a năm b năm c năm d Trên năm Lĩnh vực hoạt động Doanh nghiệp anh/ chị a Nông, lâm nghiệp thủy sản b Công nghiệp xây dựng c Thương mại dịch vụ Quy mô vốn (Tổng nguồn vốn) thể bảng CĐKT năm 2012 Doanh nghiệp anh/chị là: a Dưới 10 tỷ đồng b Từ 10 tỷ đến 20 tỷ đồng c Từ 20 tỷ đến 50 tỷ đồng d Từ 50 tỷ đến 100 tỷ đồng e Từ 100 tỷ đồng 73 Vị trí anh/chị cơng ty a Tổng giám đốc b Giám đốc/ Giám đốc tài c Kế tốn trưởng d Kế tốn tổng hợp e Kế toán viên f Khác Số năm kinh nghiệm anh/chị lĩnh vực tài chính-kế tốn? a Từ 1-2 năm b Từ 3-5 năm c Trên năm XIN CHÂN THÀNH CẢM ƠN ANH/CHỊ ĐÃ HỖ TRỢ HOÀN THÀNH BẢNG KHẢO SÁT NÀY 74 APPENDIX D: DESCRIPTIVE ANALYSIS Table 4.1: Sample characteristics TIME year years Valid years Above years Total BUSINESS SECTOR Industry and construction Agriculture, forestry and fishing Valid Trade and services Total CAPITAL Below VND 10 million From VND 10 to 20 million Valid Above VND 100 million From VND 20 to 50 million From 50 to 100 million Total 75 POSITION Director/ CFO General Accountant Valid Chief Accountant Accountant Total YEAR_EXP Above years Valid From 3-5 years Total 76 APPENDIX E: TOTAL VARIANCE EXPLAINED Total Variance Explained Component 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 Extraction Method: Principal Component Analysis 77 APPENDIX F: MULTIPLE LINEAR REGRESSION ASSUMPTION TESTING RESULTS 78 79 ... and Gia Duong, 2013) Actually, audit firms in Vietnam not meet clients’ expectation of audit quality, the low audit quality decreases clients’ satisfaction and many clients changed audit firms frequently... was conducted in Vietnam, where the audit and non -audit service is quite inexperienced Thus, this study attempts to investigate the effects of audit quality offered by audit firms on client satisfaction. .. satisfaction in Vietnam, through the perception of the client firms It was conducted for the purpose of giving benefits for both audit firms and client firms Regarding to benefits of audit firms, they