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Qualitative Results of Factors Included in the Model


The equitization roadmap is to give priority to employees to buy shares, so the sale of shares to the outside is modest. Therefore, SMEs existing in the form of joint stock companies in the province do not have much separation of ownership and management, whether they were previously state-owned companies or not. Ownership is not a typical characteristic of SMEs in the province. After receiving comments from experts, the author has removed this factor from the research model.

- The influence of professional consulting organizations: Many experts assess the important role of professional consulting organizations such as auditing, which has a significant influence on the company's decision in choosing accounting standards. If an enterprise is audited by one of the major auditing firms, the transparency and reliability of information is enhanced. Regarding the conditions of SMEs in Vietnam in general and in Gia Lai province in particular, the auditing regulations are only mandatory for companies listed on the stock exchange, or state-owned corporations. For SMEs, auditing is not required. Therefore, including the auditing factor will not be appropriate. However, at the Tax Department (tax branch) in the provinces and cities, there is always a propaganda department to support businesses. For a long time when there was no separation between accounting and tax, the role of the propaganda department was very important in guiding the accounting of enterprises to perform accounting, thereby serving both accounting for tax purposes and accounting work according to the accounting regime. In addition to the consulting role of the propaganda department of the tax authority, auditing companies in Vietnam also have a department providing accounting services or other accounting service businesses. The participation of these companies is also expected to partly affect the process of applying accounting standards in enterprises in Vietnam. In the context of SMEs in Gia Lai province, this factor is expected to affect the application of standards when the conditions for enterprises to research and implement standards themselves are still limited.

- Enterprise Age Factor: According to experts, the longer an enterprise operates, the smoother and more coordinated the accounting system will be, so the application of accounting standards will be better. When there is a certain understanding between accountants


and business owners, the transactions that arise frequently, accountants with certain experience to handle faster, timely reporting to business owners. These methods are quite suitable for the simple operating characteristics of SMEs and help save costs. However, a SME can operate for a long time but change many accounting departments and vice versa, a business can be newly operating but build a professional and reliable accounting department or hire experienced accountants to do accounting work for many businesses at the same time. After consulting with experts, the author removed the factor from the research model.

- Compulsory compliance factor: According to experts, according to regulations, SMEs are allowed to apply one of two current accounting regimes for enterprises or for SMEs, but both of these accounting regimes are built on the common set of accounting standards, issued by the Ministry of Finance. These are legal documents that all enterprises must comply with.

- Factor Benefits of applying accounting standards: The benefits of application are considered in the ability to access credit from banks, the transparency of information will help increase the image of the enterprise in the business community and thereby create conditions for expanding business activities. Experts believe that data on the financial statements of enterprises such as the Business Performance Report have a positive impact on the application of accounting standards, specifically the level of information disclosure. However, the relationship between the application of accounting standards and the benefits of applying standards is still unclear, is it a two-way relationship or the relationship between the benefits of standards and the application of accounting standards. Although there are still points of disagreement, based on the consulting experience of experts, it is still expected that the benefits of applying standards will motivate SMEs in Gia Lai province to actively implement the application of standards. Therefore, the author includes this factor in the model for official research.

After synthesizing the corrections, additions and changes, the results are as follows:


Table 2.2. Qualitative results of factors included in the model


STT

Proposed model

Qualitative results

1

Business size

Put into model

2

Business performance

Put into the model. Adjust it into two separate factors: Profitability and level.

debt utilization

3

Business owner perception

career

Put into model

4

Pressure to provide information from

objects

Remove

5

Accountant qualification

Put into model

6

Ownership

Remove

7

Consulting organization influence

job

Put into model

8

Age of the business

Remove

9

Compliance is mandatory

Enter into model. Adjust character name.

element: System of legal documents on accounting

10

Benefits of applying standards

accountant

Put into model

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Qualitative Results of Factors Included in the Model

Source: Author's synthesis

2.1.2. Research hypothesis

Based on the overview of research documents mentioned in Chapter 1 together with the results of the pilot study, the model of factors expected to affect the application of accounting standards in SMEs in Gia Lai inherits previous studies but has adjustments to suit the situation in Vietnam, specifically in Gia Lai. Groups of factors belonging to the external environment or the diversity of national accounting are not included in this study. The reason is that this is not a cross-national study like studies on the application of international accounting standards, but this study only studies the standards of a specific country, in a specific locality. In that context, issues of the external environment (such as the accounting system)


legal system, economy, education, tax…) is considered as a major control variable, helping to explain the quantitative results that the model will build.

On that basis, the thesis presents the main internal factors of SMEs in Gia Lai province. These are groups of factors related to business size, profitability, capital structure, awareness of business owners, influence of tax/audit agencies, etc. The influence of the expected factors is argued as follows:

Business size .

In many accounting studies, size is considered a significant factor affecting the application of accounting standards such as the works of Chow and Wong-Boren [70], Cooke [74] [75], Meek, Roberts and Gray [96]. Enterprise size is a factor affecting the application of IFRS for SMEs [87]. This factor has a wide influence because it is related to the field, location of operation of the enterprise, financial resources, human factors, information asymmetry between managers and owners. Studies show that large-scale enterprises usually operate in many fields, the complexity of economic operations is very high, so the application of accounting standards will be more complete. On the other hand, the larger the enterprise, the better the quality of human resources, including accounting personnel to implement the application of accounting standards. Studies in Vietnam on the scale factor affecting the application of accounting standards have not yet been consistent in the direction of influence. This is partly because the scale in many studies by Dang Ngoc Hung [19], Nguyen Thi Phuong Thao [34] and Nguyen Thi Ngoc Diep and colleagues [33] is still measured based on expert opinions rather than financial information. In Gia Lai, SMEs also have large differences in scale, which also affects the application of standards, so the thesis also expects a positive relationship between scale and the application of standards. Measuring scale by the total value of assets of enterprises, the hypothesis is put forward as follows:

Hypothesis H1: The larger the enterprise, the higher the level of application of CMKT.

Profitability.

The profitability of a business is also considered a factor influencing the application of accounting standards. However, studies on the impact


The influence of this factor is also inconsistent. Belkaoui and Kahl [56], Singhvi and Desai [159], Wallace and Naser [176] [177] argue that profitability has a significant influence. Enterprises with high profitability often expand their business areas and seek funding sources to implement new business plans. In that context, the active application of accounting standards is a prerequisite for information disclosed through financial statements to be honest and reasonable; and that is one of the criteria for partners (banks, investors, shareholders, etc.) to consider before making funding decisions. However, there are also a number of other studies by Dumontier and Raffournier [86], Inchausti [113] and Meek et al. [129] that argue that there is no solid evidence on this issue. Studies on profitability or performance have not shown the impact on the application of accounting standards in Vietnam. In Gia Lai SMEs, SMEs with high profitability always have plans to expand their business, thereby needing external funding. Compliance with accounting standards will contribute to making the financial statements of SMEs more reliable, contributing to completing the profile when borrowing from commercial banks. Therefore, the hypothesis is proposed as follows:

Hypothesis H2: The greater the profitability of a business, the higher the level of application of accounting standards.

Debt utilization rate .

Enterprises are formed from many different sources of capital such as equity, bank loans or other debts. It is the sponsors of the capital sources of enterprises that have a significant impact on the use and compliance of accounting standards by enterprises to meet the information needs of users. In terms of applying international standards, studies show that if enterprises participate extensively in the international capital market, such as listing on foreign stock exchanges, borrowing capital from the International Monetary Fund, the World Bank, etc., it will significantly affect the application of accounting standards [182]. Research by Sekely and Collins [154] shows that there is a positive relationship between the level of use of standards and the level of use of bank loans. On the contrary, companies that use less debt or capital mobilized from the business owners themselves are less interested in using accounting standards because


Information that does not need to be shared with other parties.

In Vietnam, there are few studies on the impact of debt use (capital structure) on the application of accounting standards. In the case of SMEs in Gia Lai province, loan applications always include financial statements to perform part of the financial appraisal. If SMEs apply accounting standards well, it will contribute to increasing the reliability of financial statements. This is a plus point in the financial appraisal process to access funding from banks. Therefore, the hypothesis is:

Hypothesis H3: The more a company uses bank loans, the higher the level of application of CMKT.

Business owner awareness .

Accounting is considered a tool for managers to check and monitor all activities and operations of the enterprise. Authors Page [140], Collis and Jarvis [72] believe that business owners are often more concerned with tax declaration than with compliance with accounting regulations in applying accounting standards, which affects the quality of information provided in financial statements. Compliance with tax regulations is always prioritized over compliance with accounting regulations, so the quality of information provided in financial statements is often poor because compliance with the principles in the standards is not implemented. In many cases, accounting is used as a means to declare taxes under state management, but many business owners are not really interested in the management role of accounting.

For medium-sized enterprises that can participate in listing on the stock market, the requirement of transparency and financial disclosure is always mandatory. Owners and administrators are often interested in applying standards when organizing accounting work. Studies in Switzerland show that if standards are applied well, the ability to find business contracts will be greater and thus will significantly increase profits for the company. For SMEs in Vietnam, the research results of Tran Dinh Khoi Nguyen [35], Nguyen Thi Ngoc Diep and colleagues [33] also showed that the interest of owners and managers also has a positive impact on the application of accounting standards. This study also found that:


The study expected a positive relationship in SMEs in Gia Lai province when the owner's direction greatly affects many management functions, including accounting. From here, the hypothesis is put forward as follows:

Hypothesis H4: Business owners' perception of the position of accounting work has a positive impact on the application of accounting standards.

Qualification of accountant .

Accounting staff competence is reflected in the skills and qualifications of staff that enable them to fulfill their accounting work responsibilities [179].

The history of accounting development in countries shows that the development of accounting is related to the level of education and professionalism of accountants. In order to comply with regulations on the application of accounting policies, especially the successful application of IAS, accountants need to be fully educated in knowledge and practical experience of IFRS because this is an important factor in complying with accounting regulations in the application of IAS [183]. Research in many countries shows that the more university-level accountants have, the higher their ability to apply standards. This is consistent with reality because the knowledge gained during the training process will help accountants have a better understanding of accounting science, the ability to apply and choose appropriate accounting techniques and policies to maximize the benefits of their businesses. Therefore, the promulgation of standards and their application in practice requires accountants to have certain knowledge and acquire ideas to apply standards to accounting work.

From this perspective, the author believes that the transition to a market economy has changed many aspects of accountants' perceptions, so this should be considered an indispensable factor. The results of many previous studies in Da Nang and Ho Chi Minh City also show a positive relationship between accountants' capacity and the application of standards [33][35]; however, Nguyen Thi Phuong Thao's study [34] on the application of standards in SMEs in the Northwest sub-region shows a negative relationship. However, the thesis still expects a positive relationship because people are the decisive factor in the process of processing accounting information when they have knowledge of accounting standards. The issues of measurement and disclosure of information in each standard require accountants to have certain capacities, and cannot rely on calculating machines.


Therefore, the hypothesis is:

Hypothesis H5: The higher the level of accountants, the greater the level of application of accounting standards.

The impact of career counseling

The original studies on this issue often concern the relationship between the application of international accounting standards by enterprises and auditing organizations. Al-Baskeki [46] argues that auditing firms have a significant influence on the decision of the company in choosing accounting standards, especially international standards. This study has pointed out the role of independent auditing firms in the world. If a company is audited by one of the major auditing firms, usually, that company is more interested in applying international accounting standards.

Regarding the conditions of SMEs in Vietnam in general and in Gia Lai province in particular, the auditing regulations are only mandatory for companies listed on the stock exchange, or state-owned corporations. For SMEs, auditing is not required. Therefore, the inclusion of the auditing element would not be appropriate. However, at the Tax Department (tax branch) in the provinces and cities, there is always a propaganda department to support businesses. For a long time when there was no separation between accounting and tax, the role of the propaganda department was very important in guiding the accounting of enterprises to perform accounting, thereby serving both accounting for tax calculation purposes and accounting work according to the accounting regime. In addition to the consulting role of the propaganda department of the tax authority, auditing companies in Vietnam also have a department providing accounting services or other accounting service businesses. The participation of these companies is also expected to partly affect the process of applying IT in enterprises in Vietnam.

When looking at the overview of domestic studies, the role of this factor is also unclear. The research of Dang Ngoc Hung [19] and Tran Dinh Khoi Nguyen [35] shows a positive influence on the application of standards, but the research of Nguyen Thi Ngoc Diep and colleagues [33] shows no

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