PhD. thesis: Orientation of establishing and applying legal framework on accounting for SMEs in Vietnam

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Object of research: The object of research of the thesis is legal documents governing the accounting work of SMEs promulgated and being applied in Vietnam and legal framework on accounting applied for SMEs in some countries as well as International Financial Reporting Standards for SMEs.

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Nội dung Text: PhD. thesis: Orientation of establishing and applying legal framework on accounting for SMEs in Vietnam

INTRODUCTION PART 1. Research motivations At present, although small and medium enterprises (SMEs) account for a very big density and have a very important position for the development of economy but accounting work at these enterprises in general has not been paid special importance. The organization content of accounting work has not been associated to become a system under a scientific procedure, it is implemented unsystematically according to the objective proposed by enterprise owner or Board of Directors to cope with the management authority which is mainly taxation authority, it is not actually bring useful accounting information for use objects. If there is the situation above, it is because many different reasons, in which the outstanding reason is that legal regulations on accounting for SMEs have not been studied, promulgated firmly, systematically and suitably for operation fact of Vietnam SMEs at present. This matter created the gap in legal term in organizing, implementing the accounting as well as the strictness in complying with the promulgated legal documents. Over the past time, there were many research works relating to accounting work at SMEs but there is almost no comprehensive, general research on legal framework of accounting applied to SMEs. Starting from the situation above, we select the subject “Orientation of establishing and applying legal framework on accounting for SMEs in Vietnam” as PhD. thesis. 2. Research objectives Through some implemented research results, it is possible to see that the reality at present about accounting work at SMEs still has many shortcomings; meanwhile, legal documents about accounting in force have not actually been suitable for management and operation features of SMEs, thus the arisen issues in fact have not been settled satisfactorily, the application of these documents to reality still has many limitations. To contribute to improving this real situation, we implement the thesis with objective: on the basis of evaluating the real situation of application of legal documents on accounting applied to SMEs in force in Vietnam and approach to legal framework on accounting for SMEs in some countries, the thesis implemented the formation of legal framework on accounting generally for these enterprises and studied the application of this legal framework efficiently. 3. Object and scope of research Object of research: The object of research of the thesis is legal documents governing the accounting work of SMEs promulgated and being applied in Vietnam and legal Page 1
framework on accounting applied for SMEs in some countries as well as International Financial Reporting Standards for SMEs. Scope of research: the legal framework on accounting is researched under many different levels. In this thesis, we focus on legal documents about accounting applied for Vietnam SMEs. The survey object, measurement scales and research model verified for typical cases are SMEs limited in Ho Chi Minh City and neighboring provinces. 4. Research methodology To achieve the research objective, in this thesis, we use in combination between two methods of qualitative research and quantitative research. Qualitative research is used in this research with technique of interviewing expert opinions representing the researchers, teachers of accounting and auditing, people who do directly the accounting and objects using accounting information of SMEs. The result of this research is basis for us to develop the draft survey questionnaire. From this step, the questionnaire will be built and then carried trial survey to discover the sentences and words which are difficult to understand or easy to cause mistake, determine the suitability of content of questions, discover the errors of the draft and check the measurement scale as a first step, thence create the product which is complete survey. Quantitative research is implemented through stages: designing research sample, collecting information from survey sample, analyzing data by processing software SPSS 20 through the steps of descriptive statistics, exploratory factor analysis and regression analysis. First of all, the analysis of descriptive statistics helps the thesis put forth judgments about reality of organizing accounting work at SMEs and quality of accounting information supplied by these enterprises. Besides, we also use Independent Sample T-test to verify the difference in judgment among object groups. During the analysis of models affecting to the application of legal documents at Vietnam SMEs, we implemented the verification of measure scale by reliable factor Cronbach Alpha, removed the variables having small correlation coefficient with total variable; used EFA - Exploratory factor analysis on SPSS 20 and removed the variables with small parameter by checking the coefficients of Factor loading and extracted variances, evaluated the suitability of research model through coefficient KMO (Kaiser-Meyer-Olkin). The next step is to verify Cronbach Alpha (CRA) for measurement scales. This is statistic verification on closeness level (ability to explain a research concept) of collection of observation variables (questions). Then, we continued to run regression model to evaluate the suitability level of model and considered the effect of factors to the application of legal documents on accounting at Vietnam SMEs. Page 2
5. Contributions of the research  On scientific term The completed thesis had contributions in scientific term as follows: - Systematizing the issues about general argument on legal framework of accounting for SMEs in some typical countries in the world as well as in Vietnam; analyzing the factors affecting to the application of legal documents on accounting and accounting work at SMEs. - Analyzing the real situation of organizing accounting work at SMEs and situation of applying legal documents on accounting at these enterprises; at the same time, analyzing the content and quality of accounting information supplied by SMEs, as well as information demand of use objects. - Forming complete legal framework on accounting for SMEs, including the system of necessary legal documents and structure, main content of such documents. - Contributing to developing the measurement scale of factors affecting to the application of legal documents at SMEs in the context of developing countries like Vietnam.  On reality term - Clarifying the real situation of accounting work at Vietnam SMEs, thereby, assisting the authorities, boards, sectors and managers in evaluating the efficiency and feasibility of legal documents on accounting in force for these enterprise; assisting to acknowledge more comprehensively about accounting information supplied by SMEs as well as information demand of use objects. - Research result will be valid scientific arguments for researchers and legislative authorities to refer during the construction of complete legal framework on accounting for SMEs; at the same time, the thesis put forth significant suggestions to help the process of deploying, applying legal documents on accounting to reality at SMEs quickly and efficiently. 6. Structure of the research The structure of thesis in addition to the introduction part introducing the context of research, objective, scope and object of research, summarizing the research method as well as new contributions of the thesis; main content part of the thesis is presented in 5 chapters as follows: Chapter 1: Overview on research situation relating to the thesis. Chapter 2: Theory basis on legal framework on accounting for SMEs Chapter 3: Research methodology Page 3
Chapter 4: Research result and orientation solutions for forming and applying legal framework on accounting for Vietnam SMEs. Chapter 5: Conclusion and recommendation. Final part of the thesis is works of author relating to the thesis, list of reference and enclosed appendixes. CHAPTER 1: OVERVIEW ON RESEARCH SITUATION RELATING TO THE THESIS. 1.1. Overview on researches relating to legal framework on accounting for enterprise announced in the world In this part, we carried out summary examination of researches relating to legal framework governing the accounting work at enterprises in general, attached special importance to the researches relating to legal framework on accounting for SMEs announced on prestigious magazines, thesis, valuable research works in many countries in the world. 1.2. Overview on researches relating to legal framework on accounting for enterprises in Vietnam To grasp the research situation relating to the issues being mentioned by the thesis and aim at finding out the research slit, we studied the overview on announced researches relating to legal framework governing the accounting work at enterprises in genera and SMEs in particular. 1.3. Comment on implemented researches and issues to be further researched 1.3.1. For works abroad In general, the contents of research works which we studied in scope of existing database mainly relate to the issue of applying International Financial Reporting Standards to the countries and their impacts, or analyze some factors affecting to the process of promulgating the standards,… These researches often attach to the countries with developed market, or attach to socio-economic specific features, specific politics and culture of the country researched by the author. Therefore, the result of these researches is only suitable for some certain countries, the research condition and result of some researches are quite far from Vietnam. Relating to legal framework on accounting for SMEs, the researches focus mainly on issues of applying accounting standards for SMEs in countries, specifically, they are conditions for applying IFRS international standards for SMEs, impact of applying International Financial Reporting Standards on accounting system of each country as well as the process of integrating into international accounting of the countries. Quite many Page 4
researches focus on the countries having accounting system developed at high level. For conversion market like Vietnam, the quantity of researches on legal framework on accounting for SMEs was not announced much. In the researches we summarized, it is possible to see that the subject cared much by researchers is the issue of applying legal documents; this thing proves that putting legal documents into reality is a very important stage so that these documents promote the effect, bring socio-economic efficiency for enterprises, objects using the information in particular and entire society in general. Besides, one of the main functions of accounting is to provide information and products of accounting which are reports to provide useful information to use object. Therefore, the research to determine clearly the object of using accounting information of SMEs and their demand on information has very important significance in the process of researching, setting up legal framework on accounting for these enterprises. For this reason, the researches on this subject also account for considerable quantity. On research method, many works were implemented very meticulously such as research works of Jill Collis & Robin Jarvis on way of enterprise owner - manager of small enterprises in UK using accounting information have sample size to 2288 enterprises, with close theory basis, carefully analyzed collection data, the research result had high persuasion nature (Jill Collis & Robin Jarvis, 2000); or research of author group of Daniel Zeghal and Karim Mhedhbi about factors affecting to the application of international standards in developing countries surveyed at very wide scope in 64 countries belonging to developing countries; therefore, the conclusion given from this research is very reliable and has reference value for many researches later (Daniel Zeghal & Karim Mhedhbi, 2006). However, in some researches, the basis for author putting forth these judgments was only based on argument, analysis and subjective judgment of author; thus the persuasion nature of the article was not high (such as the article of Wayne Lonergan, 2003). Or some authors mainly used methods of comparison, analysis, explanation, thus the objectiveness and persuasion nature of the article were still limited (such as the article of Fennell David, 2005). Although there are some points not suitable for socio-economic features of Vietnam, or many researches were implemented in the legal environment condition not compatible to Vietnam, through researches of foreign authors, we can withdraw some experience lesions for Vietnam in researching, forming legal framework on accounting applied for enterprises in general and SMEs in particular. Many results gained from research works (such as interest and obstruction as applying international standards, process of promulgating standards, participation of people doing accounting work during the promulgation of legal documents, Page 5
factors affecting to the process of applying accounting standards…) are very worthy for regulators caring during the promulgation of legal documents on accounting, especially the issue of researching, promulgating the system of accounting standards for SMEs as well as development itinerary of national accounting system in accordance with integration tendency of international accounting. 1.3.2. For works in Vietnam Through the part summarized by the author, it is possible to see that most of research works studied, evaluated the accounting regulations promulgated by the State as well as the application of regulations into the fact of accounting work at enterprises. Besides, research authors also mentioned many different aspects during the integration, conversion of Vietnam accounting to international accounting, conditions for integration and conversion, reality of integration and conversion processes as well as impact of these processes and many other related issues. For SMEs, quite many implemented researches related to accounting activity of these enterprises; however, the articles, research subjects and thesis only exploited some very small aspects in the subject aspect on accounting for SMEs. However, we see that there is absence of research aspect on process of promulgating legal framework, effect of factors to promulgation process,… it may be due to the feature of Vietnam that legal documents on accounting are promulgated by the State authority to ensure the requirement on management aspect; therefore, this issue is rather sensitive and difficult to approach. In general, the authors only introduced International Financial Reporting Standards to SMEs, compared, analyzed and collated among standard systems, or only compared some specific standards, the ideas were based on subjective view of authors (such as the article of authors: Chuc Anh Tu, 2010; Ha Thi Ngoc Ha, 2013). From research result, some authors put forth general solutions with orientation nature for the completion of legal documents; they have not had specific solutions with feasibility. The summary result from domestic research works which were announced may be missing specialized works with reliable implementation method to study comprehensively about legal framework of accounting applied for SMEs. Therefore, it is possible to affirm that this is a weak aspect in accounting research in Vietnam; it needs to be supplemented by researches in the coming time. However, the researches announced previously help creating an argument and reality background so that on such basis, we can study and further build, complete the legal framework of accounting applied for Vietnam SMEs. 1.4. Determination of research issue Page 6
To achieve the proposed objective, the thesis determines some issues to be settled specifically as follows: - Analyzing real situation of organizing accounting work at SMEs and situation of applying legal documents on accounting at these enterprises in recent time. - Analyzing the content and quality of accounting information provided by SMEs and surveying the information demand of different objects to orient the model of complete legal framework on accounting to be built to ensure the supply of output information suitable for demand of these objects. - Studying legal framework on accounting for SMEs in some countries to have basis for forming complete legal framework on accounting suitable for Vietnam SMEs. - Analyzing the factors impacting on the application of legal documents to reality and clarifying the impact level of these factors, thereby proposing the suggestion to help these documents being applied in reality quickly and efficiently. SUMMARY OF CHAPTER 1 Inheritance of research result of works announced in the world as well as in Vietnam and acknowledgement of limitations, shortcomings of implemented researches have a very important significance in determining the research objective of the thesis. With the determined research objective, formed orientation and application of legal framework on accounting for SMEs are aimed at improving the quality of accounting activity at these enterprises and providing more useful information to use objects. CHAPTER 2: THEORY BASIS ON LEGAL FRAMEWORK ON ACCOUNTING FOR SMES This Chapter will present some general issues such as concept, feature of SMEs, and feature about accounting information as well as legal document system for these enterprises. In addition, the content of this chapter will summarize basic features in regulation of international accounting applied for SMEs and legal framework on accounting for these enterprises in some typical countries as well as in Vietnam, thereby withdrawing important conclusions as the basis for orientations and solutions given in the next chapter of the thesis. The ending part of chapter will mention the background theories applied by thesis as forming legal framework on accounting for SMEs. Page 7
2.1. Some general issues about SMEs and legal framework on accounting applied for SMEs. The content of this section focuses on some general issues on SMEs such as definition and feature of SMEs, analyzes some features of SMEs governing the promulgation of legal framework on accounting for these enterprises as well as feature about information shown on financial statements of SMEs. Besides, we also present the overview on legal framework in general affecting to business activity of SMEs and legal framework on accounting applied for these enterprises. In addition, the thesis also analyzes and summarizes the factors affecting to the application of legal documents on accounting into reality of accounting activity at SMEs as the basis for building and verifying the research model mentioned at chapter 4. 2.2. International Financial Reporting Standards for SMEs (IFRS for SMES) and system of legal document on accounting for SMEs in some countries and Vietnam. At present, the countries in the world are different on knowledge and development speed, business environment, legal environment, cultural feature…, therefore, it is indispensable as the accounting systems of countries are different. Through considering International Financial Reporting Standards for SMEs and legal framework governing the accounting work at SMEs in some countries, we withdraw some noticeable points as follows: In recent years, the globalization of economic activity and quick development of capital market arise the demand on standard set of financial statements accepted globally (F.F. Hussain et al, 2012). International Financial Reporting Standards for SMEs (IFRS for SMEs) were created to meet such urgent demand and at present, over 80 countries put into application or informed the application plan. Through studying, we realize that at present, there are two tendencies: the first tendency, some countries (Brazil, South Africa, Hong Kong, Turkey, Singapore, Malaysia, Philippine,...) put the original of IFRS for SMEs to apply in SMEs in their countries (Hana Bohusova, 2011); The second direction was selected by many countries (such as USA, China,..), it is to base on International Financial Reporting Standards to build their own standards suitable for features of SMEs in their countries. Vietnam cannot separate from such tendencies. In the condition of Vietnam SMEs as well as what has been done for big enterprises, the most feasible direction for our country is to select the second direction among two tendencies mentioned above because it converges with international accounting, brings interest for developing countries, it brings to these countries the system of standards compiled carefully as well as accounting background and accounting principles with highest quality (Wolk et al, 1989; according to Zeghal & Mhedhbi, 2006), on the other hand, these regulations are designed, corrected again, they will be more suitable in the condition of Vietnam. Therefore, the current issue is to quickly deploy, step by Page 8
step build the accounting standard system for SMEs so that accounting activity at these enterprises is implemented within complete legal framework. 2.3. Applied theories The building of legal framework on accounting and process of putting the regulations into reality need to base on some theories which were studied and applied so that proposals will be feasible, bring interest to enterprises, objects using information as well as entire society. With the research subject on building legal framework on accounting for Vietnam SMEs, we base on some basic theories as follows: Signalling theory, decision-usefulness theory, stakeholder theory, public - interest theory, capture theory. SUMMARY OF CHAPTER 2 Systemization of general argument issues on SMEs and legal framework on accounting applied for these enterprises is an important step as premise as directing towards the objective of forming legal framework on accounting for SMEs. At the same time, it is necessary to consider international regulations as well as regulations of different countries in order to have comprehensive view, withdraw experience lessons during research to help legal regulations to be feasible, suitable for the reality in Vietnam and integration tendency of international accounting. Page 9
CHAPTER 3: RESEARCH METHOD This Chapter introduces analysis framework of the thesis, methods for solving the issues and proposed research objectives. 3.1. Analysis frame of research Objective of thesis Evaluating - Feature of Vietnam SMEs legal FORMING framework - Legal documents governing Overvi LEGAL on accounting work of Vietnam ew on Qualitative accounting researc FRAMEWO and SMEs method h and RK ON application backgr of legal ound ACCOUNTI documents International regulations and theory NG in reality basis practice on accounting for SMEs APPLIED FOR SMEs Factors affecting to application Requirement on improving of legal Quantitative framework quality of SMEs in the method on condition of development and integration economy accounting in reality at SMEs 3.2. Research process and method 3.2.1. Qualitative research Qualitative research method is used in the thesis with technique of interviewing expert idea to study the judgment of object groups about quality of accounting information provided by SMEs, about legal document system on accounting regulated for SMEs, as well as explore the factors affecting to the application of these legal documents in reality and viewpoint of completing legal framework on accounting for SMEs. In order to generalize many factors under different categories, we took the ideas of many experts representing for different object groups: object group directly applying legal documents on accounting, object group having professional knowledge about this matter, object group using accounting information provided by SMEs, specifically some people who are directly doing the accounting or management work at SMEs, researchers and teachers about accounting, cadre of enterprise inspection department of taxation agency, staff of enterprise credit department of the bank. The result of this research will this research will help to discover, supplement and adjust Page 10
important factors affecting to the ability to apply the regulations in reality of accounting work at Vietnam SMEs. At the same time, on this basis, outlining some orientations in completing legal framework on accounting for SMEs. This is the basis for us to develop the draft of survey questionnaire. From this step, with the built questionnaire, we carry out trial survey of some objects who are students for 2nd degree in major of finance and banking, have basic knowledge on economics, accounting to discover the sentences which are difficult to understand or easy to cause mistake, determine the suitability of question content, discover the errors of the draft and check the measurement scale as a first step, thereby create the product which is complete survey. 3.2.2. Quantitative research Quantitative research is implemented through stages: designing research sample, collecting information from survey sample, analyzing data by processing software SPSS 20 through steps of descriptive statistics, analysis of recovery and regression factors. In this subject, the research sample was selected mainly in Ho Chi Minh City. The survey questionnaires can be completed by different modes. However, due to cultural characteristics of Vietnamese people, we mainly use the way of direct interview toward survey object to strengthen the reliability for collected information. Besides, to overcome the difficulty on geographical distance, the questionnaire can be sent via email for some objects at far distance and having no condition for meeting. As designing the questionnaire, we built the measurement scale under the type of measurement scale Likert 5 points for measuring the consent level of survey objects with proposed ideas relating to legal framework on accounting for SMEs in force, on accounting information provided by SMEs relating to the factors affecting to the application of legal documents on accounting at SMEs as well as orientation of completing these legal documents. To serve the research works, the author collected the data with size of survey sample of 500 enterprises and 300 objects using information in the research area. The survey table after interviewing will be gathered, checked preliminarily the information on survey note to eliminate the unreasonable notes. These may be noted containing much information which does not have answer or the question is contradictory, or marks more than 1 selection for the questions with only one answer, the number of valid answer samples is 391 for enterprise and 157 for object using information. After this preliminary checking step, we will enter the information from survey notes to computer. Before carrying out treatment and analysis, the data needs to be coded and cleaned. Cleaning the data is aimed at discovering the errors which may happen, they are blanks (due to error during the collection of data or error due to entering the data) or answer Page 11
note is unreasonable (such as answers have data not being in designed measurement scale). We process the data through following analysis: descriptive statistics, evaluation on reliability of measurement scale, exploratory factor analysis and regression analysis. Specifically: using descriptive statistics to analyze judgment of survey objects about accounting information provided by SMEs as well as evaluation on legal document system in force applied for these documents. This tool is also used at the maximum as considering the idea of objects about orientation of completing legal framework on accounting in force for SMEs. Besides, the thesis also uses Independent Sample T-test (verification of equality on average value of 2 general issues from information of 2 independent samples) to check the difference in judgment between object group playing the role of creating information (accountant) and object group using accounting information (banking credit staff, staff of enterprise checking office of taxation… During the analysis of model of factors affecting to the application of legal documents at Vietnam SMEs, we implemented the verification of measurement scale by Cronbach Alpha reliability coefficient, eliminated the variables with small correlation coefficient of total variable; used EFA - Exploratory factor analysis on SPSS 20 and eliminated the variables with small parameters by checking Factor loading and extracted variance; evaluated the suitability of research model through KMO coefficient (Kaiser- Meyer-Olkin). In this research, factor analysis is applied to summarize the observation variables into some certain factors measuring the different aspects of research concept. The standards of applying and selecting variables for EFA analysis including: Bartlett standard and KMO coefficient used for evaluating the suitability of EFA, EFA is considered as being suitable as 0.5 ≤ KMO ≤ 1 and sig 1 and accepted as total extraction variance ≥ 50% (Nguyen Dinh Tho, 2011). Standard of factor loadings coefficient shows correlation between variables and factors, it is used to evaluate the significance level of EFA. According to Hair et al. (2006), Factor loadings > 0.3 is considered as reaching minimum level, Factor loadings > 0.4 is considered as being important, Factor loadings > 0.5 is considered as having reality significance. In addition, the difference on factor loadings coefficient of an observation variable among factors must be greater than or equal to 0.3 to ensure the discrimination value among factors (Nguyen Dinh Tho, 2011). The result of this process helps us rearrange the measurement scale, reduce observation variable set and consider how much percentage of the model the selected factors can explain. Page 12
The next step is to verify Cronbach Alpha (CRA) for measurement scales. Cronbach Alpha is statistics verification about closeness level (ability to explain for a research concept) of collection of observation variables (questions) through Cronbach Alpha coefficient. Some researchers believed that Cronbach Alpha coefficient having value from 0.6 and more was acceptable measurement scale in term of reliability (Nunnally & Bernstein, 1994, according to Nguyen Dinh Tho, 2011). However, Cronbach Alpha did not show which variable should be eliminated and which variable should be retained. For such reason, besides Cronbach Alpha coefficient, people also used item - total correlation and variables with item - total correlation smaller than 0.3 will be eliminated. Like this, through running CRA, we can consider whether the measurement scale of concept in the model has acceptable reliability or not; and with these steps, the thesis determined the model of factors affecting to the application of legal documents on accounting at Vietnam SMEs. After determining the model of factors through steps described above, we carried out analysis of multiple regression (MLR) to evaluate the suitability of model with research data, at the same time, considering the relationship and effect level of these factors for the application of legal framework on accounting at SMEs. SUMMARY OF CHAPTER 3 To achieve the research objective, the thesis built the analysis framework and coordinated synchronously many different research methods on the basis of solid background theory. The research result created from applied methods will be the basis for putting forth the orientations for forming legal framework on accounting for SMEs and researching, applying into reality of accounting work at SMEs to improve accounting activity at these enterprises and provide more useful information to use objects. CHAPTER 4: RESEARCH RESULT AND ORIENTATION SOLUTIONS FOR FORMING AND APPLYING LEGAL FRAMEWORK ON ACCOUNTING FOR VIETNAM SMES. This Chapter reflects multi-directional angle of view of object groups about quantity as well as quality of accounting information provided by SMEs, evaluation of related parties about legal framework on accounting in force applied to SMEs and application in reality of accounting work to create the accounting information in service of the demand of use objects, analyzes factors affecting to the application of legal documents on accounting in reality of Vietnam SMEs, presents the viewpoint and orientation of forming and applying legal Page 13
framework on accounting for SMEs in Vietnam, support solutions aimed at applying legal framework on accounting for these enterprises efficiently. 4.1. Research result 4.1.1. Evaluating achievement and shortcomings of legal documents on accounting for SMEs in force and issue of applying these documents in reality of accounting work at Vietnam SMEs - On accounting information provided by SMEs Research result shows that survey objects in general agree partly with the judgments (because average point level according to Likert measurement scale is over 3, from 3 to 4), in which, the higher agreement level is for the idea “SMEs supply the information quickly, timely” or “information ensures the quantity in accordance with the regulation”, the agreement level is the lowest agreement level for the idea that “accounting information provided by SMEs is regularly used for making decision”, this thing also reflects correctly the real situation at present, it seems that financial statement of SMEs is not considered as main information source, reliable basis for making economic condition. The interesting information found from survey result is that financial statement under the decision 15/2006/QD-BTC is believed to provide the information more suitable than the statements under decision 48/2006/QD-BTC (average agreement level is 3.54 vs 3.39). This thing explains why in fact, many SMEs still register the use of accounting regime under the decision 15/2006/QD-BTC while there is dedicated accounting regime for SMEs. - On legal documents on accounting in force applied for SMEs At present, the accounting work at SMEs is governed by accounting law, accounting standards and accounting regime as well as related guidance decrees and circulars. This survey focuses on three most important document levels namely law, standard and accounting regime. Gained result after processing statistics is as follows: Most of answerers agreed with the idea that Accounting Law has many backward contents and the current accounting standard system is not suitable and difficult to apply for SMEs. Most of ideas rather agreed with the viewpoint that formation of complete legal framework on accounting is urgent demand at present, it is necessary to supplement into accounting law the contents for SMEs or the viewpoint on promulgating separately a set of accounting standards for these enterprises also receive many agreement ideas. Page 14
The survey objects also agreed with the direction on building account system under open direction, form of financial statements is flexible, suitable for scale of enterprise. 4.1.2. Analyzing factors affecting to the application of legal documents on accounting at Vietnam SMEs After the process of analyzing, the thesis withdrew the research model, it was adjusted to remain 5 factors affecting to the application of legal framework on accounting at Vietnam SMEs, including: factor 1 with measurement scales relating to accounting infrastructure and actual experience of accountants, thus we still consider the factor as “Accounting infrastructure”, Factor 2 is “Document system itself”; Factor 3 is “Accountant”; Factor 4 is “Compliance compulsoriness” and finally, it is factor relating to “Interest - cost relation” Accounting Document infrastructure system itself Application of legal documents in reality of accounting work at Interest - cost SMEs relation Accountant Compliance compulsoriness Figure 4.2 - Adjusted research model After building the model of factors affecting to the application of legal documents in reality of accounting work at Vietnam SMEs, we carried out the verification of this research model through analysis of multiple regression model (MLR) to evaluate the suitability of the model, consider the impact level of these factors to the application of legal documents. Considering the regression density table, we see that these factors impact on same direction to Y, these variables have statistic significance (because sig. = .000), do not violate the phenomenon of multicollinearity, that means the factors do not have correlation to each other. Besides, based on magnitude of Beta coefficient, it is possible to realize that factor 1 - Accounting infrastructure is the most important factor, impacts the most strongly on the application of legal documents on accounting at SMEs; next, it is factor 4 about compliance compulsoriness of these regulations. The impact level of remaining factors is factor 3 - Accountant, factor 5 - Interest - cost relation and finally, factor 2 - Legal document system Page 15
itself has the lowest effect. This verification result shows the effect level of factors to the application of legal documents on accounting at Vietnam SMEs, this is the result having very important significance in putting forth the solutions to help legal documents on accounting to be applied in reality. 4.2. Viewpoint and direction of forming and applying legal framework on accounting applied for SMEs in Vietnam 4.2.1. Viewpoint The viewpoint of thesis as forming legal framework on accounting for Vietnam SMEs in the coming time includes: Firstly, inheriting selectively the current legal framework for enterprise in general as the background for building completely the legal framework on accounting for SMEs. Secondly, approaching international regulations and practices to modernize legal framework to improve the integration nature on accounting. Thirdly, being suitable for specific characteristics on scale, knowledge and management requirement of SMEs so that proposed solutions are realistic and complied strictly. Fourthly, ensuring the balance, harmony between interest and cost in researching, promulgating and putting into application of legal framework on accounting for SMEs. 4.2.2. Orientation of forming To propose the solutions aimed at forming legal framework on accounting for SMEs which need outlining suitable orientations. Based on argument withdrawn from overview argument, operation reality of SMEs and legal regulations on accounting in force, we determine basic orientation for forming legal framework on accounting applied for Vietnam SMEs. This is a big and rather complex issue; thus, it is necessary to establish suitable steps. This process needs to be divided into 2 periods, short-term period is from now to 2020 and long-term period is from 2020 upwards. The selection of this stage is suitable for reality of Vietnam SMEs, with existing resource of legislation authority, at the same time, suitable for itinerary of implementing the commitment with International Federation of Accountant of the Ministry of Finance on the objective of integrating internationally completely in the field of accounting in 2020 as well accounting development strategy approved by the government on 18/03/2013. Page 16
 Short-term period (from now to 2020): In this period, legal framework is built under the integration direction applied jointly for enterprises under every type and different scales but there are specific separate regulations for SMEs so that these enterprises can apply favorably and easily.  Long-term period (from 2020 upwards): The formation of legal framework on accounting for SMEs in this next period will inherit the results completed in previous period to promote the synchrony and unity. Core content of this period is to build separate legal framework for SMEs under the direction of connecting big enterprises in order to suitable for the change on scale during development of SMEs to help these enterprises organize the implementation of accounting work specifically, explicitly and improve the compliance. 4.3. Solution for forming and applying legal framework on accounting for Vietnam SMEs 4.3.1. Solution group relating to orientation of forming legal framework on accounting for SMEs The enterprise has the role of business subject of the economy, thus the promulgation of solid legal background for the enterprise is the best way to improve the operation efficiency of enterprise, thence improve the economy - society of Vietnam. The governing laws during the operation of SMEs are mainly Corporate Law, Investment Law, Taxation Law and Accounting Law. The completion of these laws will help to create clear and favorable business environment for enterprise. Besides, to help the accounting activity at SMEs happen favorably, the issue is that management authorities need to design and build a system of complete legal documents and a mechanism ensuring efficient application of them, in which attaching special importance to completing the system of accounting standards, accounting regimes and related guidance circulars. On the other hand, we believe that it is necessary to improve the process of promulgating these legal documents so that legal framework on accounting for SMEs has high quality and is applied efficiently in reality. It is possible to summarize under the form of diagram of legal framework on accounting applied for Vietnam enterprises, in which there are SMEs after building as follows: Page 17
Accounting Law Accounting standard system Corporate accounting regime Financial statement Financial Reporting subsystem applied governing Standards applied for enterprise (including Financ for enterprise consolidated ial financial statements) flexible Report ing Financial Financial System Reporting governing statement Standards applied subsystem for SMEs applied for SMEs 4.3.1. Solution group for applying legal framework on accounting for SMEs 4.3.2.1. Improving issues relating to legal document system The scope of this solution group include the issues on connotation of legal documents on accounting applied for SMEs, including compliance compulsoriness of these documents as well as consideration, settlement of interest - cost relation as applying such legal documents. 4.3.2.2. For accountant Human is one of the decisive factors during the application of legal documents in accounting activity of enterprises in general and small and medium enterprises in particular. To apply legal framework on accounting at SMEs fully and efficiently, an important issue which needs care for these enterprises is the work of training and improving the professional knowledge of accounting division, improving the responsibility spirit of each individual participating in accounting work in the unit. 4.3.2.3. Completing accounting infrastructure Accounting infrastructure is catalyst promoting the process of applying legal documents in reality, helping the accounting activity happen favorably and efficiently. The scope of this solution mentions about the issues such as informaticizing the accounting work, using accounting software at SMEs, issue of developing occupation opportunity, training work,… Page 18
SUMMARY OF CHAPTER 4 To form legal framework on accounting for SMEs in conformity to the reality and have high feasibility, the issue of studying, judging of related parties about accounting information provided by SMEs at present as well as the ability this information meets the demand of use objects is very necessary; on such basis, together with basis given in previous chapters, the thesis puts forth the viewpoint, orientation and solutions for forming and applying legal framework on accounting for SMEs in Vietnam. In addition, the thesis analyzed the effect factors as well as effect level of each factor to the application of legal documents on accounting in reality of accounting work at Vietnam SMEs. CHAPTER 5: CONCLUSION AND RECOMMENDATION 5.1. Conclusion In current condition, according to the achieved survey result, the system of legal documents on accounting for enterprises, especially SMEs is not only insufficient but also not synchronous, the regulations have not achieved high harmony with international practice, have not met well the more and more implicit requirements of the market economy. This thing leads to the fact that accounting information provided by SMEs has not been highly evaluated, is not suitable for demand of use objects. To improve this issue, the urgent requirement at present is to build complete legal framework on accounting applied for Vietnam SMEs. According to the viewpoint of the thesis, as forming legal framework for SMEs, it is necessary to inherit selectively the legal framework on accounting in force, at the same time, approach the international practice to improve the integration on accounting and especially, suitable for the scale, knowledge and management requirement of SMEs. This legal framework also needs to be built on the basis of social interest theory, holding theory and theory of related parties,… to ensure harmonious interest among the parties, balance the cost interest for SMEs as applying. On the other hand, formation of legal framework on accounting for SMEs is a very complex issue relating to the legal system governing the operation of these enterprises and legal documents under many levels relating to the organization which implements the accounting work such as Accounting Law, Accounting standards, accounting regime, documents guiding, supporting the implementation. Therefore, the issues must be solved in turn according to the itinerary with short-term and long-term specific solutions. In which, the most important ones are frame legal documents including: Accounting law, accounting standard and accounting regime to be adjusted, newly made on the spirit of agreeing the accounting system applied for enterprises with different scales on the basis of legal base which has discrimination among the scale levels of enterprise as applying Page 19
in the fact; at the same time, it is necessary to improve considerably the process of promulgating legal documents on accounting to increase the social opponent for the process of building and completing the system of legal documents. Besides, it is necessary to implement the supporting solution group to help the process of applying legal framework on accounting for SMEs to be convenient and efficient, attach much importance to the factors relating to organizing, applying legal framework on accounting, process of promulgating legal document system, accounting infrastructure and accountant. To implement successfully and efficiently the solutions put forth by the thesis, it is necessary to have regular care with high responsibility spirit and incessant effort of the State management levels, occupational organizations and SMEs themselves, at the same time, it needs to have contribution of many individuals and organizations having responsibility, capacity and confidentiality. 5.2. Recommendation To form legal framework on accounting applied for SMEs as well as put this legal framework in operation reality of SMEs, this issue relates to responsibility of many appropriate authorities and SMEs themselves. Originating from the legal framework proposed at chapter 4, in this part, we state some implications about responsibility of each related object such as National Assembly, Government, occupation associations, training facilities and SMEs themselves. 5.3. Limitation of thesis and suggestion for the next research direction In addition to the achieved result, the thesis cannot avoid some certain limitations. The sample of research cannot represent for ideas of all SMEs, researchers, accounting information users,… the selected sampling method is convenient method thus the quality of research sample is not high. In addition, the responsibility nature in answering the question is not high, it leads to the fact that although achieved survey result ensures the requirement on statistics, we are not actually pleased. To support the introduction of legal documents in reality of accounting work at SMEs, the thesis carried out the research on factors affecting to this application ability. The research result finds out the adjustment model with 5 effect factors. Therefore, there are other factors, other observation variables affecting to the application of legal documents on accounting at SMEs but they have not been studied comprehensively in the current research model due to the limitation on scope of enterprise to be surveyed and limitation of some research conditions. Based on this research result, the next researches should develop the model, introduce more other factors to the research model. Page 20