THE MINISTRY OF EDUCATION AND TRAINING
UNIVESITY OF ECONOMICS HO CHI MINH CITY

NGUYEN THI HOANG LAN

EVALUATING THE AFFECTING OF INTERNAL CONTROL
STRUCTURE TO THE EFFECTIVENESS OF INTERNAL
CONTROL IN PUBLIC NON – BUSINESS AGENCIES
IN VIETNAM

Major: Accountancy
Code: 9340301
SUMMARY OF PhD THESIS
SUPERVISOR:
Assoc. Prof. PhD. MAI THI HOANG MINH
PhD. PHAM NGOC TOAN

HO CHI MINH CITY – 2019


The thesis was completed at:
University of Economics Ho Chi Minh City
Supervisor:
Assoc. Prof. PhD. Mai Thi Hoang Minh
PhD. Pham Ngoc Toan
Critic 1:

Critic 2:

Critic 3:


in public non – business agencies in Vietnam and getting
moderator by contingency characteristics on political regime.
Questions:
(1) Did internal control structure affect to the effectiveness of
internal control in public non – business agencies in Vietnam and
the affecting was positive or negative?
(2) Which factor was moderator affecting to the relationship
between internal control structure and the effectiveness of internal
control? And the affecting was positive or negative?
3. Subject and Scope


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The subject of study: the relationship between internal control
structure and the effectiveness of internal control in public non –
business agencies in Vietnam.
The subject of survey and the scope of study: public non –
business agencies in Vietnam.
The period of time for data collection: from 01/05/2018 to
30/09/2018.
4. Research Methodology
This thesis used mixed research methods including qualitative
method and quantitative method.
Qualitative method: finding out moderator variable base on
contingency characteristics on political regime, socialist - oriented
market economy development in Vietnam.
Quantitative method: Evaluating the affecting of internal
control structure to the effectiveness of internal control in public
non – business agencies in Vietnam.
5. New contributions

public sector
1.2.1. Researches on the internal control structrure at governmental
entities in public sector
Internal control structure is a definition, were showed in many
studies on internal control in public sector. Some studies showed
that Internal control structure and Internal control system were
replaced each other (Eisenberg , 1997; O’Leary et al, 2006; Johari
et al, 2016). Other studies in quantitative research showed that
Internal control structure includes five factors and is measured
with five indicators (control environment, risk assessment, control
activities, information and communication, and mornitoring)
((Jokipii, 2006; Bilgen et al, 2018). INTOSAI issued INTOSAI GOV
9110 - Guidance for Reporting on the Effectiveness of Internal
Controls: SAI Experiences: in Implementing and Evaluating
Internal Controls, and building effective internal control structures
as one of main problems. The measurement of internal control
structures was based on the control self-assessment method (CSA
method) (Adamec et al, 2002). The CSA questionnaire method
respondents were asked to give their opinions about funtionality
of the internal control in their agencies, on scale from1 to 4 (1 –
strongly agree to 4 – strongly disagree). In conclusion, internal
control structure in this thesis is five factors and is measured with
five indicators (control environment, risk assessment, control
activities, information and communication, and mornitoring)


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1.2.2. Researches on affecting of the internal control, the effectiveness
of intrenal control to the governmental entities in public sector
Internal control was helpful to risk management effective,

and internal control in entity, the effectiveness of internal control.


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1.3. Literature review in Vietnam of internal control at
governmental entities in public sector
In Vietnam, internal control in governmental agencies in public
sector were researched. There were some studies with subject about
improving internal control (Nguyễn Bính Ngọ, 2011; Đinh Thế
Hùng, 2013, Nguyễn Đức Thọ, 2015) and complying with
regulations in internal control (Thịnh Văn Vinh, 2016; Lê Đoàn Minh
Đức et al, 2016) in public sector. From review, researching the
relationship between internal control structure and the
effectiveness of internal control, through moderatoring, is not
done in Vietnam.
1.4. Research gap
From overview researches in Vietnam and in the world shows
that the relationship between internal control structure and the
effectiveness of internal control was studied, but the research
didn’t analysis in moderator model. The author selects the topic
evaluating affecting of internal control structure to the
effectiveness of internal control in public non-business agencies in
Vietnam with moderator model.

CHAPTER 2. THEORETICAL BASIS
2.1. Introduction
This chapter introduces theoretical basis about internal control,
internal control structure, the effectiveness of internal control and
public non-business agencies, political regime, contingency
characteristics of public non-business agencies in Vietnam, theory

2.2.3. The the effectiveness of intrenal control in public sector
INTOSAI GOV 9100 (2004), effectivesess of internal control
refers to “ the extent to which objectives are achieved and the
relationship between the intended impact and the actual impact of an
activity, and extent to which the stated objectives have been attained
in a cost – effective way”. In public sector, the general objectives are
being achieved: Executing orderly, ethical, economical, efficient and
effective operation; Fulfill accountability obligations; Complying with
applicable laws and regulations; Safeguarding resources against lost,
misuse ang damage”.
2.3. Overview of public non – business agencies
2.3.1. Definition of public non – business agencies and type
Definition of Public non – business agencies in this research
follow by Law in public employees 2010.


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2.3.2. Operating environment of public non – business agencies in
Vietnam
2.3.2.1. Socialist – oriented market economy of Vietnam
Socialist – oriented market economy of Vietnam was definited in
Document of the 12th National Party Congress of The communist
party of Vietnam.
2.3.2.2. Operating environment of public non-business agencies
Public non-business agencies had to comply with laws and
regulations, about entity’s objectives, organization structure, financial
autonomy.
2.3.2.3. Financial automony of public non-business agencies
Financial automony of public non-business agencies is a part of
agency’s proactivity. In present, financial automony get four level: (1)

with that. In public non-business agencies, party organization and
social – political organization operate in.
2.4.4. Competence –Based View
Public non-business agencies operate with financial rules and
source from government.
2.5. Proposing the research model and the research hypothesis
Based on review and theoretical background, the research
model proposed the following:

Moderator: contingency
characteristics

Internal control
Structure

The
effectiveness of internal control

Figure 2.2. proposing the research model
There are three kinds of variable in proposing the research
model
(1) Independent variable: internal control structure
(2) Dependent variable: effectivesess of internal control
(3) Moderator variable: contingency characteristics
Proposing research hypothesis:


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Hypothesis 1: internal control structure affecs to the effectivesess
of internal control in public non – business agencies in Vietnam.



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3.4.1. Analysis for ensuring the reliability of measurement scale
Preliminary quantitative methods: through Cronbach’s alpha
coefficient assess reliability of measurement scale of five components
in internal control structure and four objectives in the effectiveness of
internal control.
3.4.2. Exploratory factor analysis
Preliminary quantitative methods: through exploratory factor
analysis assess the value of measurement scale of components in
internal control structure and objectives in the effectiveness of internal
control.
3.4.3. Testing of the hypotheses by using SEM, SEM multi groups
Formal quantitative research: using confirmatory factor analysis –
CFA, structural equation model – SEM, SEM multigroups.
To validate the measurement model of SEM, SEM multigroups
with:
Chi-square test (X2) < 3,00
Root Mean Square Error of Approximation (RMSEA) < 0,08
Comparative fit index (CFI) >0.90
Tucker – Lewis index (TLI) > 0,90
Standardized RMR (SRMR) < 0,08
3.5. Research sample and data analysis
3.5.1. Research sample
Qualitative methods: 18 experts
Preliminary quantitative methods: 130 agencies
Formal quantitative methods: 380 agencies
3.5.2. Data analysis
SPSS: Cronbach’s Alpha: Analyze - Scale –Reliability Analysis

entity was carried out during the last year; RISASS 4:those in
managerial functions were aware of the risks of their areas of
responsibility and knew how risk management was implemented;
RISASS 5: in my opinion, the agency’s risks analysis and means of
protection could have been more efficient.
Control activities
CONACT 1: there were functioning controls in the agency’s
processes which gave warning whenever something exceptional
occurred; CONACT 2: as soon as something exceptional and
undesired was noticed it was promptly and appropriately dealt
with; CONACT 3: in the definition of task special attention was
paid to authorisation and the special demands of tasks; CONACT


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4: in my opinion the internal control measures should have been
stepped up still further; CONACT 5: the intire personnel had
updated jop descriptions.
Information and communication
INFCOM 1: the personnel had no problems in obtaining
information pertaining to their own work tasks; INFCOM 2: the
reports forwarded to management were sufficiently clear and
contained information relevant from the management
perspective; INFCOM 3: sufficient information moved between the
different divisions of the agency so that the smooth uninterrupted
running of operation could be ensured; INFCOM 4: our agency’s
information and communications system was not quite up to date
with respect to function; INFCOM 5: the work was effficiently
coordinated within the function and also with other functions.
Monitoring

(COMLAW)

Safeguarding
resources
against lost, misuse and
damage. (SAFRES)

obligations on public funds; ACCOBL
2: Fulfill accountability obligations on
fairness;
ACCOBL
3:
Fulfill
accountability obligations on all
aspects of performance
COMLAW 1: Complying with
applicable laws and regulations in
budget; COMLAW 2: Complying with
applicable laws and regulations on
proper administration; COMLAW 3:
Complying with applicable laws and
regulations
on
environmental
protection; COMLAW 4: Complying
with applicable laws and regulations
on anti-fraud and corruption acts.
SAFRES 1: Safeguarding resources
against lost; SAFRES 2: Safeguarding
resources against misuse; SAFRES 3:

Agencies were surveyed with each field rate fit to rate in real.
3.8.4. Analysis for ensuring the reliability of measurement scale
Cronbach’s alpha coefficient assess reliability of measurement
scale of five components in internal control structure and four
objectives in the effectiveness of internal control.
Cronbach’s alpha results of all scales are reliable, the item-total
correlation coefficients are high (α > 0,6), so we can use for EFA.
3.8.5. Analysis for ensuring the valuable of measurement scale - EFA
Conducted EFA for internal control structure (5 components) and
the effectiveness of internal control (4 objectives), results show that
there are reliable scales.
3.8.6. Conclusion
Results of measurement of internal control structure and the
effectiveness of internal control are suit for prior studies.
CHAPTER 4. RESEARCH RESULTS AND DISCUSSION
4.1. Introduction
4.2. Results of qualitative research
4.2.1. Data collection and sumerize
The qualitative interview was conducted with 16 experts (8
experts face to face; 3 experts by phone; 5 experts by email), getting
their opinion about the relationship between internal control structure
and the effectiveness of internal control, and which the contingency


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characteristics of public non-business agencies as a moderator in
research model.
4.2.2. Data analysis and discussion
About the relationship between internal control structure and the
effectiveness of internal control: 16/16 experts agree with having

Sampling: survey 380 agencies, after filted getting 353 agencies
using in the formal quantitative research (education and training
sector: 69,97 %; health sector: 10,48%; other sectors: 19,55%).
4.3.2. Analysis of internal control structure of the public non-business
agencies in Vietnam
4.3.2.1. Confirmatory factor Analysis for internal control structure
Conducted CFA for internal control structure (a reflective
measurement charactistic, with 5 components). Results showed
that research model of internal control structure had an acceptable fit
with: Chi-square/df = 1,966 < 3; TLI = 0,948> 0,9; CFI = 0,954 >
0,9 ; RMSEA = 0,052 < 0,080.
4.3.2.1. Structrural equation model for internal control structure
Analysis technique: Pattern matrix model builder, SEM from
353 agencies in formal quantitative research. Results showed that
research model of internal control structure had an acceptable fit
with: Chi-square/df = 1,982 < 3; TLI = 0,947> 0,9; CFI = 0,952 >
0,9 ; RMSEA = 0,053 < 0,080.
Standardized regression weight highest was 0,832
(information and communication), lowest was 0,752 (risk
assessment).
4.3.3. Confirmatory factor Analysis for variables in model research the
affecting of internal control to the effectiveness of internal control
Conducted CFA for internal control structure and the
effectiveness of internal control (two reflective measurement
charactistics). Results showed that research model of internal
control structure had an acceptable fit with: Chi-square/df = 1,604
0,9; CFI = 0,952 > 0,9 ; RMSEA = 0,041 < 0,080.
Results showed that this model had an good fit with data
collected from public non-business agencies.
4.3.4. Evaluating the affecting of internal control to the effectiveness

organizations in agencies

4.3.4.2. Result of evaluating the affecting of internal control to
the effectiveness of internal control across SEM
Testing H1: Internal control structure impacts positively to the
effectiveness of internal control in public non-business agencies in
Vietnam.
Results showed that this research model had an acceptable fit
with: Chi-square/df = 1,613 < 3; TLI = 0,946> 0,9; CFI = 0,950 >


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0,9; RMSEA = 0,042 < 0,080. Results showed that this model had
an good fit with data collected from public non-business agencies.
Accepted H1.
Internal control structure affected positively and strongly to the
effectiveness of internal control in public non-business agencies in
Vietnam.
4.3.5. SEM for congtingency characteristics affect to the relationship
between internal control and the effectiveness of internal control
4.3.5.1. Moderation model research
4.3.5.2. Moderation model for financial autonomy
Testing H2: Financial automony affects positively to the
relationship between internal control and the effectiveness of
internal control.
Results showed that this research model had an acceptable fit
with: Chi-square/df = 1,443 < 3; TLI = 0,916> 0,9; CFI = 0,922>
0,9; RMSEA = 0,036 < 0,080. Results showed that this model had
an good fit with data collected from public non-business agencies.
Table 4.7: Testing hypothese results

4.3.5.3. Moderation model for annual operating results of the party
organization and the social - political organizations in the public nonbusiness agencies


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Testing H3: Annual operating results of party oganization and
social – political organizations affects positively to the relationship
between internal control and the effectiveness of internal control.
Results showed that this research model had not an acceptable
fit with: Chi-square/df = 1,754 < 3; TLI = 0,876< 0,9; CFI = 0,885

moderator variable, affected positively to the relationship between
internal control structure and the effectiveness of internal control in
public non-business agencies in Vietnam. Findings out a
moderator variable in researching relationship between Internal
control structure and the effectiveness of internal control is a new
contribution in this thesis.


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LIST OF WORKS OF THE AUTHOR
1. Nguyen Thi Hoang Lan et al (2015). Bulding internal control
system framework for public non-business agencies in
agriculture and rural development in Vinhlong. Research.
2. Nguyen Thi Hoang Lan (2018). Improving performance of
public non-business agencies by internal control. Finance
Review, May 2018, p 38-40.
3. Nguyen Thi Hoang Lan and Lam Thi Truc Linh (2018).
Bulding effective internal control structures for entities in
public sector. Accounting & Auditing Review, May 2018, p
47-49.
4. Nguyen Thi Hoang Lan (2019). Evaluating the affecting of
internal control structure to the effectiveness of internal
control in public non-business agencies. Accounting &
Auditing Review, Mar 2019, p 85-89.