The effectiveness of the internal control system in Vietnamese credit institutions
-
DOIhttp://dx.doi.org/10.21511/bbs.15(4).2020.03
-
Article InfoVolume 15 2020, Issue #4, pp. 26-35
- Cited by
- 1148 Views
-
514 Downloads
This work is licensed under a
Creative Commons Attribution 4.0 International License
In the context of global economic integration, there are many opportunities for promoting economic development, but there are also challenges of complexity and risk in business activities. This always raises many questions that need to be resolved for credit institutions. The internal control system of credit institutions has become increasingly important for the sustainable development of the national financial system. The purpose of the paper is to evaluate the effectiveness of the internal control system in the practical application of Vietnamese credit institutions. Descriptive statistics are applied to analyze data using SPSS software. The structured questionnaire is designed to collect objective opinions and purposive sampling techniques among 382 experts who are managers of credit institutions in 2020. The results show that all five components improve the effectiveness of the internal control system, and the internal control system plays a role in the safety of Vietnamese credit institutions. Thus, the Central Bank of Vietnam should improve the legal framework and related internal control provisions for credit institutions in accordance with international principles to improve the effectiveness of the internal control system.
- Keywords
-
JEL Classification (Paper profile tab)G28, G32, M41, M42
-
References20
-
Tables10
-
Figures0
-
- Table 1. Cronbach’s alpha (for management oversight and control culture)
- Table 2. Descriptive statistics (for management oversight and control culture)
- Table 3. Cronbach’s alpha (for risk recognition and assessment)
- Table 4. Descriptive statistics (for risk recognition and assessment)
- Table 5. Cronbach’s alpha (for control activities and segregation of duties)
- Table 6. Descriptive statistics (for control activities and segregation of duties)
- Table 7. Cronbach’s alpha (for information and communication)
- Table 8. Descriptive statistics (for information and communication)
- Table 9. Cronbach’s alpha (monitoring activities and correcting deficiencies)
- Table 10. Descriptive statistics (monitoring activities and correcting deficiencies)
-
- Amudo, A., & Inanga, E. L. (2009). Evaluation of Internal Control System: A Case Study from Uganda. International Research Journal of Finance and Economics, 1(27), 124-144.
- Ayagre, P, Gyamerah, I. A., & Nartey, J. (2014). The effectiveness of Internal Control System of banks: The case of Ghanaian banks. International Journal of Accounting and Financial Reporting, 4(2), 377-389.
- Bank for International Settlements (BIS). (1998). Framework for internal control system in banking organizations.
- Central Bank of Viet Nam. (2011). Circular No. 44/2011/TT-NHNN stipulating the internal control system and internal audit of credit institutions.
- Central Bank of Vietnam. (2018a). Circular 13/2018/TT-NHNN regulating internal control system of commercial banks and foreign bank branches.
- Central Bank of Vietnam. (2018b). Circular 40/2018/TT-NHNN regarding the amendments and supplements to a number of articles of Circular 13/2018/TT-NHNN.
- COSO. (2013). Internal Control – Integrated Framework.
- Gamage, C. T., Lock, K. L. & Fernando, A. A. J. (2014). A Proposed Research Framework: Effectiveness of Internal Control System in State Commercial Banks in Sri Lanka. International Journal of Scientific Research and Innovative Technology, 1(5), 25-44.
- Hair, J. J. F., Black, W. C., Babin, B. J., Anderson, R. E., & Tatham, L. R. (2006). Multivariate Data Analysis. New Jersey: Pearson International Edition.
- Kumuthinidevi, S. (2016). A Study on Effectiveness of the Internal Control System in the Private Banks of Trincomalee. International Journal of Scientific and Research Publications, 6(6), 600-612.
- Mcnally, J. S. (2013). The 2013 COSO framework and SOX compliance. Durham: COSO.
- Millichamp, A. H. (2000). Auditing: An Instructional Manual for Students. London: Item Man Publishers Ltd.
- National Assembly of Vietnam. (2017). The amended Law on Credit institutions. Vietnam: Hanoi Publishing House.
- Nguyen, P. T. (2018). Effectiveness of The Internal Control System in The Private Joint-Stock Commercial Banks in Thai Nguyen Province, Vietnam. The 5th IBSM International Conference on Business, Management and Accounting (pp. 766-780).
- Shaman, R. B., & Senan, N. (2019). A Study on Effectiveness of Internal Control System in Selected Banks in Saudi Arabia. Asian Journal of Managerial Science, 8(1), 41-47.
- Tran, T. A. H. (2019). The influence of internal control on business performance in commercial banks in Vinh Long province. Journal of Accounting and Auditing, 9, 61-65.
- Tunji, S. T. (2013). Effective Internal Controls System as Antidote for Distress in The Banking Industry in Nigeria. Journal of Economics and International Business Research, 1(5), 106-121.
- Vietnamese Banking Association. (2019). Identifying credit violations: filling legal loopholes and managing bank credit activities.
- Vietnamese Ministry of Finance. (2017). Loopholes in internal inspection, supervision and control of commercial banks.
- Yakubu, I. N., Alhassan, M. M., Iddrisu, N. A., Adam, J., & Sumaila, M. R. (2017). The Effectiveness of Internal Control System in Safeguarding Assets in the Ghanaian Banking Industry. International Journal of Management and Commerce Innovations, 5(1), 544-557.