VIETNAM ACADEMY OF SOCIAL SCIENCES
THE INSTITUTE OF SOCIAL SCIENCES
BUI THANH SON
INTERNAL CONTROL SYSTEM
IN VIETNAMESE COMMERCIAL BANKS
Major:
Economic Managemet
ID
: 9 34 04 10
SUMMARY OF DOCTORAL THESIS IN ECONOMICS
Hanoi - 2020
The paper is completed at:
VIETNAM ACADEMY OF SOCIAL SCIENCES
Supervisor: Assoc.Prof. Dr. Tran Dang Kham
Reviewer 1: Assoc.Prof. Dr. Bui Duc Tuan
Reviewer 2: Assoc.Prof. Dr. Hoang Van Hai
Reviewer 3: Assoc.Prof. Dr. Do Duc Minh
The thesis is defensed before the Doctoral guidance committee,
organised at Vietnam Academy of Social Science
At …… .., ….. … 2020
The thesis can be found at:
National Library.
Vietnam Academy of Social Sciences Library.
1
INTRODUCTION
1. Abstract
Since the early stages of establishment and development, the commercial
banking system has always played an important role and is one of the centers of
the economy. The banking business is a type of business with a lot of risks, fraud,
and errors. Ensuring the prudence in the business activities of commercial banks is
not only managed by bank administrators but also the concern of state
management agencies and the whole society. The bankruptcy of a bank can cause
a chain collapse in the financial - banking system, greatly affecting the entire
economy. The operation of Vietnamese commercial banks has been having big
problems in corporate governance. Negative impacts on commercial banks and the
economy in recent times such as the appropriation of assets, removal of State
assets, theft of assets, misuse of assets, collusion between banks' goods with
businesses, between banks to profit, ... causing consequences to the whole
economy. Based on the findings and causes of internal control, commercial banks
can improve internal control in the direction of development and use appropriate
tools to promote the role of internal control. It is best to base on the research
results of the limitations of internal control. A survey of the Basel Committee on
major failures and the collapse of banks around the world have shown that one of
the main causes is the failure of the management of banks in establishing and
maintain strong, regular, and effective internal control. To prevent losses and risks
that may occur in the course of banking business, in addition to the inspection,
examination, and supervision measures of the State management agencies, first of
all, the bank itself. Commercial goods must have effective measures, one of which
is to establish an adequate and effective internal control system.
Stemming from the above reasons, the author chose the topic "Internal
control in Vietnamese commercial banks" as the research topic for the thesis.
2. The purpose and research tasks of the thesis
Research purpose: Proposing solutions to perfect the internal control system
(internal control system) in commercial banks (commercial banks) in Vietnam.
Research tasks:
- Based on the theory of internal control systems, internal control systems in
general, and internal control systems in particular banks, the thesis systematized and
added basic theoretical issues about internal control systems in commercial banks.
- The thesis researches analyze, synthesizes, and assesses the current state
of the internal control system in commercial banks, showing the limitations of the
internal control system and the causes.
- The thesis researches and proposes solutions to perfect internal control
systems in commercial banks in Vietnam.
3. Subject and scope of the thesis research
- The object of research: The research object of the thesis is the internal
control system at commercial banks in Vietnam.
2
- Research scope
* In terms of content: Internal control is known to be an effective method in
management and Internal control system is an effective tool to achieve
management objectives. Therefore, when researching on the internal control
system, the thesis topic limits the scope of the thesis's research is the internal
control system in commercial banks in Vietnam.
To achieve the research purpose, the thesis focuses on (i) Clarifying control
functions in management; determine the nature, role, objectives, principles, and
components of the internal control system in commercial banks; banking sector
characteristics and factors affecting internal control system; the relationship of the
internal control system with risk management in the bank; basic contents of state
management on internal control system in commercial banks and lessons from
international experience. (ii) Analyze and assess the status of state management of
internal control systems and components of internal control systems in
commercial banks between 2013 and 2018; Evaluate the results, limitations, and
causes. (iii) Identify comprehensive views, directions, requirements, and solutions
to improve internal control systems in commercial banks in Vietnam.
* Space: Focusing on the internal control system of Vietnamese commercial banks
* Time: Research the current situation of the internal control system in
commercial banks in the period of 2013 – 2018
4. The research method of the thesis:
- Method of generalizing, synthesizing, and analyzing: Used to generalize,
analyze, and synthesize basic principles of internal control system through works,
documents, works of some authors. With the operation of commercial banks to see
the factors and characteristics of the banking industry to design and operate
internal control systems in commercial banks. The thesis studies the experience of
some countries in the world on the operation of internal control systems in banks,
from which to draw experience that can be applied to Vietnam.
- Methods of investigation, observation, interview: The author designed a
questionnaire to investigate combined with in-depth interviews at commercial
banks. The author combines observations of state management agencies,
operations of internal control units in commercial banks, the purpose is to clarify
the state management situation on internal control systems and its components.
Internal control equipment in Vietnamese commercial banks. Respondents to the
questionnaire were bank officials working at the sections of the professional
departments, the Internal Audit Department, and the Supervisory Board of
commercial banks. Respondents are officials who are involved in state
management in the banking sector; banking experts; Board of Directors (Board of
Directors) at some bank branches, leaders, and employees of Supervisory Board
(Supervisory Board) of some commercial banks.
- Data processing method: From the results of surveys, observations, and in-
depth interviews, the author has synthesized and used statistical software to
3
analyze and assess the current state of the internal control system at commercial
banks in Vietnam.
- Data sources:
+ Secondary data source: To systematize the theoretical basis of internal
control systems at commercial banks in Vietnam, the author has compiled the
source of documents and studies that have been done domestically and
internationally. Learn the summarized reports, audited financial statements of
Vietnamese commercial banks in the period of 2013-2018 from the website of the
State Bank and of commercial banks, from which statistics, summarizing the audit
opinions, read audited reports and audited financial statements compared to
current regulations to get information about the operation process of commercial
banks. Studying the summarized reports of the banking industry, documents of the
State Bank's Inspection and Supervision Agency to synthesize and compare with
the current regulations to find shortcomings in the sector's document-making
work. banks as well as limitations in the state management of commercial banks.
+ Primary source: To learn more about internal control systems at commercial
banks, the author surveyed by questionnaire (appendix3) in combination with interviews
with 17 Vietnamese commercial banks listed on the floor. Securities as of December 31,
2018. The questionnaire is designed into 2 parts:
Part I - General information about the object to be surveyed
Part II - Questionnaire on the internal control system
* Survey questionnaire is built with 97 questions. In which: Control
environment (51 questions); Risk assessment (11 questions); Control (8
questions); Information and communication (19 questions); Supervision (8
questions). The "Totally inactive" response indicates that the control element was
not implemented. The author uses a scale from 1 to 5, in which: (level 1) with the
meaning "Completely invalid": the content asked does not have any signs that
they appear/exist/perform; (level 2) with the meaning of "Ineffective": the control
element questioned appears but is not sufficient or discontinuous; (level 3): with
the meaning of "Possible effect": the questions asked about the occurrence of
activities/procedures / related factors, there are signs of adequate and continuous
implementation but not yet persuade or need additional considerations (in the
opinion of respondents); (level 4) with the meaning of "Fairly effective": the
contents of the questionnaire appeared, performed sufficiently, continuously and
achieved relatively good results and 5 with the meaning "Totally valid":
activities/indicators/content are appropriately asked, implemented sufficiently,
continuously and there is clear evidence of good results. Respondents from levels
2 to 5 indicate that the control was implemented or applied in a bank.
* Sample size and sampling method: The random sampling method is used to
select workers to perform data collection. To calculate the sample size, the
research project used the following formula: n = Z2p (1-p) e2
