Browse > Article
http://dx.doi.org/10.13106/jafeb.2020.vol7.no3.137

Risk of Material Misstatement in the Stage of Audit Planning: Empirical Evidence from Vietnamese Listed Enterprises  

NGUYEN, Hoan (Faculty of Economics, Natural Resources and Environment, Hanoi University of Natural Resources and Environment)
NGO, Thi Kieu Trang (Faculty of Economics, Natural Resources and Environment, Hanoi University of Natural Resources and Environment)
LE, Thi Tam (Department of Accounting, Thuyloi University)
Publication Information
The Journal of Asian Finance, Economics and Business / v.7, no.3, 2020 , pp. 137-148 More about this Journal
Abstract
The purpose of this study is to investigate factors influencing risk assessment of material misstatement in Vietnamese enterprises listed on stock market. Expert interview method was conducted to discover the scales for three variables including information system, trademark, and risk assessment of material misstatement. Survey method was used to examine the impacts of eight factors on risk assessment of material misstatement. Data is collected from 317 auditors who have excellent experience in auditing financial statements of companies listed on stock market. Then, data is processed by descriptive statistics, reliability analysis, factor extracted analysis, correlative regression analysis, and analysis variance of residual change. The research findings showed that business characteristic, stakeholder pressure, and economic environment have positive relationships with risk assessment of material misstatement. Three variables including operation control and monitor, control environment, and information system negatively affect to risk assessment. Specially, business characteristic and information system, which are elements in internal control, have strongest impact on risk assessment. One the other hand, assessment of internal control plays an important role not only in the audit plan stage but also throughout the stages of the audit implementation and ending. Therefore, appropriate solutions are proposed to carry out all audit stages.
Keywords
Material Misstatement; Risk Assessment; Audit Plan; Listed Enterprise; Vietnam;
Citations & Related Records
Times Cited By KSCI : 4  (Citation Analysis)
연도 인용수 순위
1 Brazel, J., Jones, K., & Zimbelman, M. F. (2009). Using nonfinancial measures to assess fraud risk. Journal of Accounting Research, 47(5), 1135-1166. DOI: 10.1111/j.1475-679X.2009.00349.x   DOI
2 Chae, S. J., Nakano, M., & Fujitani, R. (2020). Financial reporting opacity, audit quality and crash risk: Evidence from Japan. Journal of Asian Finance, Economics and Business, 7(1), 9-17. https://doi.org/10.13106/jafeb.2020.vol7.no1.9   DOI
3 Coderre, G. D. (1999). Fraud detection. Using data analysis techniques to detect fraud. Vancouver, Canada: Global Audit Publications.
4 Curtis, A. B., Lundholm, R. J., & Mcvay, S. E. (2013). Forecasting Sales: A model and some evidence from the retail industry. Contemporary Accounting Research, 31(2), 581-608. https://doi.org/10.1111/1911-3846.12040   DOI
5 DeAngelo, H., DeAngelo, L., & Skinner, D. J. (1994). Accounting choice in troubled companies. Journal of Accounting & Economics, 17, 113-143. DOI: 10.1016/0165-4101(94)90007-8.   DOI
6 Dechow, P. M., Sloan, R. G., & Sweeney, A. P. (1996). Causes and consequences of earnings manipulation: An analysis of firms subject to enforcement actions by the SEC. Contemporary Accounting Research, 13(1), 1-36. DOI: 10.1111/j.1911-3846.1996.tb00489.x   DOI
7 Dechow, P. M., Ge, W., Larson, C. R., & Sloan, R. G. (2011). Predicting material accounting misstatements. Contemporary Accounting Research, 28(1), 17-82. DOI: 10.1111/j.1911-3846.2010.01041.x   DOI
8 DeFond, M. L., & Jiambalvo, J. (1991). Incidence and circumstance of accounting errors. The Accounting Review, 66, 643-655.
9 Ettridge, M., Scholz, S., Smith, K., & Sun, L. (2010). How do restatements begin? Evidence of earnings management preceding restated financial reports. Journal of Business Finance and Accounting, 37, 332-355. DOI: 10.1111/j.1468-5957.2010.02199.x   DOI
10 Friedlan, J. M. (1994). Accounting choices of issuers of initial public offerings. Contemporary Accounting Research, 11(1), 1-31. DOI: 10.1111/j.1911-3846.1994.tb00434.x   DOI
11 Gujarati, D. N., & Porter, D. C. (2008), Basic Econometrics (5th ed.). New York, NY: McGraw Hill.
12 Hair, J. F., Black, W. C., Babin, B. J., Anderson, R. E., & Tatham, R. L. (2006). Multivariate Data Analysis (6th ed.). Upper Saddle River, NJ: Prentice-Hall International.
13 Healy, P. M. (1985). The effect of bonus schemes on accounting decisions. Journal of Accounting and Economics, 7(1-3), 85-107.   DOI
14 Houston, R. W., Peters, M. F., & JaPratt, J. H. (1999). The audit risk model, business risk and audit-planning decisions. The Accounting Review, 74(3), 281-298. DOI: 10.2308/accr.1999.74.3.281   DOI
15 Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305-360. DOI:10.1016/0304-405X(76)90026-X   DOI
16 Johnstone, K., Li, C., & Rupley, K. H. (2011). Changes in corporate governance associated with the revelation of internal control material weaknesses and their subsequent remediation. Contemporary Accounting Research, 28(1), 331-383. DOI:10.1111/j.1911-3846.2010.01037.x   DOI
17 Palmrose, Z. V., Richardson, V. J., & Scholz, S. (2004). Determinants of market reactions to restatement announcements. Journal of Accounting and Economics, 37, 59-89. DOI: 10.1016/j.jacceco.2003.06.003   DOI
18 Jokipii, A. (2010). Determinants and consequences of internal control in firms: a contingency theory based analysis. Journal of Management & Governance, 14(2), 115-144. DOI:10.1007/s10997-009-9085-x   DOI
19 Jones, J. J. (1991). Earnings management during import relief investigations. Journal of Accounting Research, 29(2), 193-228.   DOI
20 Norman, H. D., Lombard, J. E., Wright, J. R., Kopral. C. A., Rodriguez, J. M., & Miller. R. H. (2011). Consequence of alternative standards for bulk tank somatic cell count of dairy herds in the United States. Journal of Dairy Science, 94(12), 6243-6256. DOI: 10.3168/jds.2011-4645   DOI
21 Rahman, M. M., Meah, M. R., & Chaudhory, N. U. (2018). The impact of audit characteristics on firm performance: An empirical study from an emerging economy. Journal of Asian Finance, Economics and Business, 6(1), 59-69. http://doi.org/10.13106/jafeb.2019.vol6.no1.59   DOI
22 Riley, R. A., Pearson, T., & Trompeter, L. (2003). The value relevance of non-financial performance variables and accounting information: The case of the airline industry. Journal of Accounting and Public Policy, 22(3), 231-254. DOI: 10.1016/S0278-4254(03)00021-8   DOI
23 Romney, M. B., Albrecht, W. S., & Cherrington, D. J. (1980). Auditors and the detection of fraud. Journal of Accountancy, 149(5), 63-69.
24 Sawalqa, F. A., & Qtish, A. (2012). Internal Control and Audit Program Effectiveness: Empirical Evidence from Jordan. International Business Research, 5(9), 128-137. DOI:10.5539/ibr.v5n9p128
25 Zheltoukhova, K., & Suckley, L. (2014). Hands-on or hands-off: Effective leadership and management in SMEs. Sheffield, UK: Sheffield Hallam University.
26 Srinivasan, S. (2005). Consequences of financial reporting failure for outside Directors: Evidence from accounting restatements and audit committee members. Journal of Accounting Research, 43(2), 291-334, DOI: 10.1111/j.1475-679x.2005.00172.x   DOI
27 Summers, S. L., & Sweeney, J. T. (1998). Fraudulent misstated financial statements and insider trading: An empirical analysis. The Accounting Review, 73(1), 131-146
28 Wilks, T. J., & Zimbelman, M. F. (2004). Using game theory and strategic reasoning concepts to prevent and detect fraud. Accounting Horizons, 18(3), 173-184.   DOI
29 Anderson, K. L., & Yohn, T. L. (2002). The Effect of 10k restatements on firm value, information asymmetries, and investors' reliance on earnings. Retrieved from: https://ssrn.com/abstract=332380 or http://dx.doi.org/10.2139/ssrn.332380
30 Albrecht, W. S., Albrecht, C. O., Albrecht, C. C., & Zimbelman, M. F. (2011). Fraud examination (6th ed.). Boston, MA: Cengage Learning.
31 Arens, A. A., Elder, R. J., & Beasley, M. S (2008). Auditing and Assurance Services - An integrated Approach (12th ed.). Upper Saddle River, NJ: Prentice-Hall International.
32 Bell, T. B., & Carcello, J. V. (2000). A Decision aid for assessing the likelihood of fraudulent financial reporting. Auditing: A Journal of Practice & Theory, 19(1), 169-184. DOI: 10.2308/aud.2000.19.1.169   DOI
33 Beneish, M. D. (1999). The detection of earnings manipulation. Financial Analysts Journal, 55(5), 24-36. DOI: 10.2469/faj.v55.n5.2296   DOI
34 Kreutzfeldt, R. W., & Wallace, W. A. (1986). Error characteristics in audit populations: Their profile and relationship to environmental factors. Auditing: A Journal of Practice & Theory, 6(1), 20-43.
35 Karagiorgos, T., Drogalas, G., & Giovanis, N. (2011). Evaluation of the effectiveness of internal audit in Greek hotel business. International Journal of Economic Sciences and Applied Research, 4(1), 19-34.
36 Keune, M. B. K. (2010). Auditor's misstatement materiality judgements and decisions in the post-Sarbanes-Oxley Act environment (Doctoral dissertation). Madison, WI: University of Wisconsin-Madison.
37 Kothari, S. P., Shu, S., & Wysocki, P. D. (2009). Do managers withhold bad news? Journal of Accounting Research, 47(1), 241-276. DOI: 10.1111/j.1475-679X.2008.00318.x   DOI
38 Loebbecke, J. K., Eining, M. M., & Willingham, J. J. (1989). Auditors' experience with material irregularities: Frequency, nature. Auditing: A Journal of Practice & Theory, 9(1), 1-28.
39 Marinakis, P. (2011). An investigation of earnings management and earnings manipulation in the UK (Doctoral dissertation). Nottinghan, UK: University of Nottingham.
40 Messier, W., Glover, S., & Prawitt, D. (2006). Auditing and assurance services: A systematic approach (5th ed.). New York, NY: McGraw Hill.
41 Nieschwietz, R., Schultz, J., & Zimbelman, M. (2000). Empirical research on external auditors' detection of financial statement fraud. Journal of Accounting Literature, 19, 190-246.
42 Dikmen, B., & Kucukkocaoglu, G. (2010). The Detection of earnings manipulation: The three phase cutting plane algorithm using mathematical programming. Journal of Forecasting, 29(5), 442-466. DOI: 10.1002/for.1138   DOI
43 Schultz, J. J., Bierstaker, J. L., & O'Donnell, E. (2010). Integrating business risk into auditor judgment about the risk of material misstatement: The influence of a strategic-systemsaudit approach. Accounting Organizations and Society, 35(2), 238-251. DOI: 10.1016/j.aos.2009.07.006   DOI
44 Skousen, C. J., Smith, K. R., & Wright, K. R. (2009). Detecting and predicting financial statement fraud: The effectiveness of the fraud triangle and SAS No. 99. Corporate Governance and Firm Performance (Advances in Financial Economics), 13, 53-81. DOI: 10.1108/S1569-3732(2009)0000013005.   DOI
45 Bonner, S. E., Palmrose, Z. V., & Young, S. M. (1998). Fraud type and auditor litigation: An analysis of SEC accounting and auditing enforcement releases. The Accounting Review, 73(4), 503-32.