Perfecting internal audit organization in Vietnamese construction enterprises

Currently, the size of the internal audit department can be determined by many different factors. Each company can choose different criteria for construction depending on its characteristics, field of operation, etc. From the above analysis, in the author's opinion, the following criteria are the basis for determining the size of this department:

First, Revenue. Revenue partly reflects the amount of work that the auditor must perform: The internal audit department is determined in relation to the approved internal audit cost. For example, with current construction corporations, if the revenue is below VND 1,600 billion, the internal audit department can have a size of 3 to 5 people (with an annual cost of less than VND 3.2 billion), at independent accounting units of the corporation, there can be 1 to 2 people depending on the internal audit department model. If the revenue is above VND 1,600 billion, the internal audit department should consider organizing this department at a size larger than 5 people with an annual cost of over VND 3.2 billion;

Second, the complexity of business operations: In Vietnamese construction enterprises, the complexity of each narrow field needs to be considered. The number of KTVs tends to increase if the construction field is complex such as underground works, bridges, hydropower;

Third, Geographic dispersion: The more geographically dispersed (for example, working in many places for a long time), the more likely the number of technicians will increase;

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Fourth, Management structure at the unit: If the construction corporation chooses a decentralized management model instead of centralized management, the number of internal auditors needs to increase;

Fifth, the more stringent the regulations and legal constraints that construction corporations carry out construction activities, the more technical staff they need;

Sixth, Expanded business scope. The trend of multi-industry and multi-field is taking place in many Vietnamese enterprises, including construction corporations: The orientation in building the internal audit department is that the more business fields (other than construction and installation) are involved, the larger the scale of the internal audit department needs to be.

For the internal audit department to operate effectively, the quality of internal auditors needs to be given due attention by the manager. Although the number of auditors for the internal audit department cannot be clearly and precisely determined for the unit, the standards for internal auditors can be clearly "standardized" according to the requirements. In the author's opinion, when selecting internal auditors, managers need to pay attention to the following factors in addition to auditing capacity: Good communication and communication skills; Auditing skills; Ability to

judgment and work experience; Business experience and experience in a number of important fields; Understanding of the construction sector, construction and installation business activities; Understanding of construction laws, regulations related to construction; Having good management skills; Understanding and having the ability to manage risks.

3.4. RECOMMENDATIONS FOR IMPLEMENTING SOLUTIONS TO IMPROVE INTERNAL AUDIT ORGANIZATION IN VIETNAMESE CONSTRUCTION ENTERPRISES

3.4.1. For Vietnamese construction enterprises

A major problem in the process of formation and development of the internal audit department in most corporations in our country is the awareness of enterprises about internal audit activities. This is also an issue that needs to be considered because it has a direct impact on the formation, existence and development of the internal audit department. For construction enterprises, in fact, the survey shows that not all managers have a correct and complete understanding of internal audit. A large number of managers think that internal audit is not necessary, or equate internal audit with internal control, or consider internal audit as an internal control system and do not need to be built. In addition, some opinions also believe that if there is an independent audit, it is not necessary to organize internal audit. Correct awareness of the importance of the internal audit department to management activities will have a great impact on the formation, maintenance and effective development of the internal audit department at corporations in general and construction corporations in particular.

Regarding the Internal Audit Department, the quality of the activities of the Internal Audit Departments in construction corporations has many issues to be resolved. However, a factor that greatly affects the quality of this activity is the quality of the Audit team, which is still weak, lacking and not commensurate with the established audit model. To overcome this weakness, construction enterprises need to have a satisfactory mechanism in recruiting, training, fostering and rewarding internal auditors. First of all, in the process of recruiting internal auditors, enterprises should set clear standards on professional ethics, satisfy the standards of good professional expertise and ensure the independence of auditors when performing audits.

To ensure the independence of the internal audit department, the enterprise organizing the internal audit department must comply with the State's regulations on the organizational model and within the scope of

It is necessary to choose the organizational model of this department in accordance with the characteristics of the Construction Industry and the specific operating characteristics of the unit. In the immediate future, managers at construction corporations with an internal audit department should evaluate the audit results through the past stages. Evaluate the results that have been implemented (assistance for management, detected violations, recommendations for management, etc.). From the internal audit department, it is possible to identify the advantages and disadvantages, find out the causes and implement solutions to reform both the organization of the audit department and the organization of audit work based on the assessment of the current situation at the unit.

3.4.2. Coordinating audit activities with an audit entity

Internal audit aims to assist managers in making the best decisions. However, in addition to that function, the internal audit department in construction corporations also needs to coordinate activities with external audit activities. This coordination is both an obligation, but the coordination of external audit activities with internal audit will help improve the internal audit activities themselves.

The capacity and qualifications of internal auditors in the internal audit departments of the Vietnam Construction Corporation are both lacking and have many limitations in terms of expertise. Coordinating with external auditors not only ensures the success of internal audit implementation at the unit but also allows for learning from audit experience, etc. In addition, coordination with external auditors needs a specific mechanism to be able to use each other's audit results while implementing internal audit at units that have been independently audited in the Vietnam Construction Corporation. Although there are many issues that need to be further considered, when internal audit becomes a professional activity, creating a mechanism and a principle in coordinating audit activities, including using each other's audit results, will be necessary to ensure the effectiveness of audit implementation.

3.4.3. On the State side

In most countries with developed auditing activities, countries with many large enterprises operating in many different fields, the state's intervention in internal audit activities in that country is very limited or even non-intervention. However, in Vietnam, due to its own characteristics such as: auditing activities are quite new, many auditing fields have never been performed before, the awareness of

Business units are very different in terms of inspection and control activities in general and internal audit activities in particular and due to the management mechanism. On the other hand, the operational goals of construction corporations in particular as well as business units in our country today, the biggest goal of corporations is to make a profit and optimize the use of resources. Whether social welfare is better met depends partly on the efficiency of the use of resources of these units. Moreover, construction corporations, together with corporations in other fields, are the "backbone" of the economy. Therefore, the existence of internal audit departments in corporations is increasingly recognized as an inevitable issue to help corporations achieve their goals. Therefore, the State needs to have an orientation for the development of internal audit in accordance with the law, professionally and quickly integrating into the region and the world. However, the State only intervenes initially to be able to move towards a more voluntary activity. In the immediate future, the Ministry of Finance must issue additional legal documents that more clearly stipulate the methods and procedures for building an internal audit apparatus in general corporations, and at the same time, it is necessary to distinguish activities in two areas: the public sector and the private sector.

- specific regulations for internal audit in this area; for-profit sector (enterprises) - regulations with general orientation, building standards for internal audit practice. In addition, the State, specifically the relevant management agencies such as the Ministry of Finance, the ministries in charge of construction corporations, must unify the inspection and control mechanism to avoid overlap. In the coming period, when this activity becomes more popular and voluntary in construction enterprises, State intervention needs to be gradually reduced. Instead, the development of professional associations is necessary to orient, exchange expertise, support internal audit activities, draft standards for internal audit, ... will contribute to making internal audit activities more professional.

Currently, the number of enterprises under the management of the Ministry of Construction accounts for a high proportion. On the other hand, the Ministry is the agency assigned by the State to directly manage standards related to the quality of construction works. Along with the gradual improvement of mechanisms, policies, standards, norms in construction,... the Ministry also needs to create a closer relationship between enterprises and the governing agency. In terms of management of construction enterprises in the Industry, the Ministry needs to take measures to effectively coordinate the implementation of solutions such as: Deploying the organization and management of the Construction Industry

nationwide, paying special attention to the organizational system and construction management force at district, commune and ward levels; Quality management system; Construction specialized inspection system; Strengthening the management of construction investment activities; Resolutely implementing the arrangement, innovation and improvement of the operational efficiency of state-owned enterprises; Continuing to reform administrative procedures.

In addition, the State also needs to have a basic training plan for internal auditors. First of all, it is necessary to open large-scale, focused training courses so that auditors can fulfill their responsibilities and achieve high efficiency in implementation. In the immediate future, the Ministry of Finance should set standards for internal auditors. This is very necessary to ensure the objectivity, independence and professionalism of internal auditors. However, in the future, the development of internal auditors requires a professional training system for internal auditors. In this case, training, examination, certification of practice, etc. will be transferred to professional associations.

In addition to the above opinions, internal audit activities in Vietnam also need to have a clear direction and strategy for development. This must first be reflected in the development strategy of auditing activities in Vietnam in general and the development strategy in the Industry. To develop this activity gradually to become more professional, the State needs to soon issue Auditing Standards for internal audit activities. Regarding other legal aspects of auditing activities in general and internal audit in particular, the State also needs to issue an Ordinance or Law on auditing in general (the State Audit Law has been issued) so that internal audit activities themselves have legal status for organizations in society. It is thought that this will be of particular importance at the present time for construction corporations when there have been many violations in this field in recent years.

3.4.4. For associations and auditing and accounting institutes

With the development of accounting and auditing services in general in Vietnam today, accounting and auditing organizations and professional associations have developed very strongly. However, in reality, the activities of these organizations and professional associations have not really contributed to the development of auditing activities in general.

In general, and KTNB activities in particular are commensurate with their roles. This is not true in both the sense of a social organization and a professional organization.

In order for auditing activities in general and internal audit activities in particular to develop, the role of professional organizations, professional associations and training organizations is very important. In my personal opinion, to develop internal audit activities, the Vietnam Association of Accountants and Auditors, the Vietnam Association of Practicing Auditors, the Chief Accountants Club, accounting and auditing training centers need to coordinate with relevant state management agencies, first of all the Ministry of Finance. This coordination will initially focus on drafting and promulgating standards for internal audit and internal audit guidelines at corporations. Next, these units can coordinate training and issue professional certificates on internal audit.

Thus , perfecting the organization of internal audit in Vietnamese construction enterprises in general and in Vietnam Construction Corporations in particular is an urgent requirement in the condition of ineffective internal audit activities. Based on the study of the characteristics of production activities in Vietnamese construction enterprises, especially construction corporations, the thesis focuses on perfecting the internal audit model in Vietnam Construction Corporations. The author's suggestions for improvement aim to perfect the organization of internal audit in Vietnam Construction Corporations and make it a professional activity in these corporations. Important suggestions contributing to the perfection of the organization of internal audit in construction enterprises include:

One is, Linking audit types in internal audit performed by internal audit at construction corporations;

Second, build a system of criteria to evaluate the effectiveness and efficiency performed by KTNB in member units;

Third, the ideas to develop internal audit activities to a new level in Vietnamese construction corporations - to become a professional activity, related to auditing operations such as implementation process, audit plan, audit program,...;

Fourth, choose an organizational model for the internal audit department in construction corporations in relation to other functional departments in that unit, organize the internal audit department with different models: semi-distributed internal audit department model, department

KTNB is centralized at the TCT office and the model combines the centralized model with the use of professional staff.

In this Chapter, the Author also makes a number of requirements for the State (Ministry of Finance), accounting and auditing professional associations and construction enterprises themselves to make internal audit activities truly effective, developing towards a professional activity in these units.

CONCLUDE

In the context of the country's industrialization and modernization being increasingly promoted, economic integration becoming deeper and deeper, the business environment of enterprises in general and construction enterprises in particular has changed significantly, requiring enterprises to have development directions and solutions suitable to the new situation. Although there have been many advances in business activities, construction enterprises in general and construction corporations in particular are facing many different challenges such as; ineffective operations; embezzlement and waste in the use of resources; poor construction quality; environmental pollution; ... In that context, managers need to seek and use new management policies to bring efficiency to the operations of enterprises. The reality of organizing internal audit in construction corporations has proven that choosing this type of audit is completely correct. However, the operational efficiency of this department in construction corporations is not high. Therefore, the thesis aims to perfect the organization of internal audit in Vietnamese construction enterprises, focusing on large-scale construction corporations.

Through research to implement the Topic, the Author of the Thesis has systematized theoretical issues on the organization of internal audit in enterprises and developed and expanded awareness of the organization of internal audit. In particular, for the first time, the Author has raised the theoretical issue for the audit organization to link the types of audits in an internal audit, developing this model systematically in relation to the organization of the internal audit apparatus.

In addition, the thesis has systematically studied the current situation of internal audit organization in Vietnamese construction enterprises. The survey results were conducted on a large scale, especially in the 90 construction corporations and state corporations, reflecting objectively the internal audit organization in these enterprises with sufficient representativeness. The conclusions from the research and survey process are: Internal audit in construction enterprises (focusing on construction corporations) has existed and is still existing; Internal audit departments are necessary in corporations 90, 91 and economic groups; The main audit content is financial audit, overlapping with other inspection activities, internal audit is based on the experience of accountants (mainly). The conclusion from the survey is: Internal audit activities are not suitable, not effective, not commensurate with the role and position of this department in management. The thesis also explains the causes of the above situation.

Based on the study of theoretical models, the study of the current status of internal audit activities organized in Vietnam's construction corporations and the characteristics of the industry and construction enterprises, and the study of the possibilities of applying international theories and experiences to the practice of these enterprises, the thesis has presented systematic and comprehensive solutions to improve operational efficiency and move towards professional internal audit activities in Vietnam's construction corporations. In particular, the recommendations are systematically linked by the Author to the type of joint audit from the model of linking audit contents, the corresponding audit implementation process linked to issues such as long-term planning, general audit plan, audit program to audit quality control. The organizational model of internal audit apparatus proposed by the Author is flexible in application. In addition, the issue of measuring the effectiveness and efficiency of activities in construction enterprises using the criteria has been presented by the Author.

In addition to the above contents, the Thesis also makes recommendations to the State (Ministry of Finance, the Ministry in charge of construction enterprises), construction enterprises - construction corporations themselves and accounting - auditing professional associations to ensure the effectiveness of internal audit activities at Vietnamese construction corporations, especially the professionalism in this activity./.

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