An Empirical Analysis on Determinants of Accounting Internal Control Effectiveness: Evidence from Emerging Market

Abstract

Prior research mentioned internal control as a useful management alternative to improve enterprises’ operation performance and information quality. According to Trenery (2013) internal control can be fundamentally divided into two functions of operating and accounting internal control. The paper aims to identify the determinants of accounting internal control effectiveness that are addressed in existing literature review. Primary data was collected from samples of 109 members of board of directors and chief accountants in Vietnam by direct interview and email survey. The data was analyzed using exploratory factor analysis of SPSS software to illustrate the potential factors of accounting internal control effectiveness. The result shows that there are several determinants of accounting internal control effectiveness such as: good financial ratio, efficient resources deployed, errors found in the financial reports that are convergent into three specific groups of factors, namely: effectiveness and efficiency of accounting activities, reliability of financial reporting and compliance with law and accounting regulations. Based on the research findings, some suggestions are given to enterprises in Vietnam and other emerging markets to improve the effectiveness of accounting internal control.