kỷ yếu hội nghị khoa học sinh viên

In this survey, 17 tourists, both Vietnamese and foreigners, were randomly chosen to answer various open-end questions ranging from their motivation to travel, their likes and dislikes i

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Th¸ng 5 – 2010

Supervisor: Nguyen Duc Hoa Cuong

2 ROLE OF AUDIT IN VIETNAM 18

Written by: Pham Quynh Anh, Nguyen Thi Thu Phuong (1KT-08)

Nguyen Thi Lien, Le Thi Huyen Trang (2KT-08)

Vu Thi Ngoc (3KT-08), Dang Anh Thu (1KT-08)

Supervisor: Chu Huy Anh

3 MANAGEMENT ACCOUNTING: FRAMEWORK AND PRACTICES IN

VIETNAM CASE STUDY:NATEXCO 30

Written by: Tran Hong Nhung, Nguyen Thi Hoai Thu (1KT -07) Tran Duy Nam, Vu Phuong Thao, Bui Thi Hai Yen (2KT -07)

Supervisor: Do Van Anh

4 ACCOUNTING FOR FIXED ASSETS 42

Written by: Nguyen Thi Ha, Hoang Thu Hang Bui Thi Minh Hoat, Le Thi Kim, Dinh Thi Thoi

Supervisor: Dinh Le Mai

5 SCIENTIFIC RESEARCH PAPER REPOS CONTRACTS: LAW AND

APPLICATIONS IN VIETNAM 70

Written by: Nguyen Hong Hanh Tran Viet Kien, Nguyen Thi Quyen Supervisor: Nguyen Quynh Anh

6 DANCE WITH VIETNAM INFLATION 2005-2010 84

Written by: Nghiem Truong Son, Pham Thanh Cong (BA-08)

Le Bich Thuy (AC-07), Bui Thu Van (BA-07)

Supervisor: Pham Thi Hoa Nhai

7 COUNTRY RISK ANALYSIS IN VIETNAM 98

Written by: Nguyen Thi Dieu Tuyet (3TC07), Nguyen Van Trang (2TC07)

Nguyen Thi Bich Phuong (3TC07), Luong Thu Huong (3TC07)

Supervisor: Nguyen Thu Huong

8 THE IMPORTANCE OF PHYSICAL EVIDENCE IN SEVICES

ORGANIZATION 120

Written by: Le Tuyet Lan, Thieu Thi Thuy Linh (BA08)

Luu Dieu Linh, Nguyen Thanh Huyen (BA08)

Supervisor: Tran Tuan Anh

9 MARKETING AFTER CRISIS 135

Supervisor: Ngo Phuong Dung Written by: Nguyen Thi Thu, Nguyen Thi Hoa (TR-06)

Vu Thi Thin, Hoang Thi Thanh Huyen, Do Thi Phuong (TR-06)

10 COUNTRY RISK ANALYSIS IN VIETNAM 169

Written by: Dang Thu Trang, Nguyen Thi My Hanh (3K-07) Tran Thi Quynh Trang (3K-07), Phung Thi Anh (2K-07)

Supervisor: Nguyen Thu Huong

11 GAP BETWEEN ORDINANCE AND SMALL-SCALE RETAILERS’

MANAGEMENT ON FOOD HYGIENE AND SAFETY 196

Written by: Nguyen Thi Thanh Huong (3K-08) Hoang Thu Ha (CN2-08), Nguyen Thi Thuy (2KT-07)

Supervisor: Nguyen Thi Cuc

12 The development of Standby Credit and its application in Vietnam 209

Written by: Le Thi Thu Huong, Nguyen Thi Thanh Nga

Nguyen Thi Ha Nhung, Nguyen Phuong Van

Supervisor: Phan Thi Kim Ngan

13 BILL OF LADING AND ENDORSEMENT PROCESS 225

Written by: Nguyen Van Anh (FB-07) Kieu Thi Thu Hang, Nguyen Le Quyen (FB-07)

Supervisor: Phan Thi Kim Ngan

14 EFFECTIVENESS OF INNOVATIVE TRAINING 240

Written by: Do Duc Thu (4K -07) Duong Hong Hanh, Nguyen Hai Yen (1D-07)

Supervisor: Nguyen Le Phuong Tram

15 ANALYSIS OF THE DEPENDENCE OF TOURISM REVENUE ON THE

NUMBER OF VISITORS, INVESTMENT, CPI 256

Written by: Hoang Thi Hue, Ngo Van Lung (TR-08)

Supervisor: PhD DAO Thanh Binh

16 THE FACTORS AFFECTING STATISTICS FINAL RESULTS OF FMT

STUDENTS 268

Written by: Pham Viet Dung, Luu Dieu Linh (BA-08)

Nguyen Thi Dung (BA-08) Supervisor: PhD Dao Thanh Binh

AN EXPLORATORY RESEARCH INTO WALKING TOUR DEVELOPMENT IN HANOI

Written by: Nghiem Truong Son (3K-08), Tran Thu Phuong (4K-07), Luu Thi Hoang Oanh, Bui Phan Phuong Thao, Nguyen Thi Thu (2D-07)

Supervisor: Nguyen Duc Hoa Cuong

ABSTRACT

This paper aims to analyze the potentiality of walking tour in Hanoi and find out problems which is needed to improve for further development of walking tour in Hanoi Basing on both primary and secondary method, the information collected through real experiences of tourists in Hanoi and tourist information center (HaproTic) which are conducted through interview and observe We also gathered some information about traffic, transportations and attractions in the internet through reliable sources From

those, we can conclude that

I INTRODUCTION

Being well-known as a City of Peace and ranked the sixth in top ten most attractive cities in Asia according to Travel and Leisure magazine of the US in 2007, is one the of top ten best shopping cities in Asia, of top ten best city for leisure in Asia by online tourism magazine Smart Travel Asia (2009), Hanoi, a thousand year city, is likely to be

an ideal destination for tourists from all over the world Looking at many neighbor countries such as Thailand, Singapore, Malaysia which have utilized Tourism as an engine to boost their economies, Vietnam generally and Hanoi particularly must take action to make tourism become a key industry soon

Besides many popular types of traveling such as cycling tour, in-seat coaching tour, walking tour could be a trend to develop in Hanoi because Hanoi has many potentials to nurture it

Thus, this paper focus on analyzing some aspects of Hanoi ranging from attractions, transportation, information system… to find out problems which is needed to improve

to develop walking tour and also give some recommendations and potential walking tours for further development

II LITERATURE REVIEW

1 The walking tour concept

Nowadays, tourism is defined by most of the countries as the chief industry to develop economy because tourism has become a popular global leisure activity However to meet the demand of all the customers, tour operators have to create a wide range types of tours in term of tour styles (luxury tours, budget tour) or tour activity types (adventure tours, eco-tours…) and another type of tour which depends on transportation options such as motor coach tours, train tours, bicycling tours… Among them walking tours has become a popular trend for many tourists Walking tour may refer to either a multi-day trip or a full day or partial day trip of one or more destinations

where the primary method of transportation is walking Walking tour can be led by a tour guide or be self-guided Your tour will probably involves a morning walk with sightseeing stops, lunch, a longer afternoon walk and dinner

distance between destinations is not too long and accessibility for walking tourists is somewhat convenient By participating in walking tour, tourist can take advantage of seeing destinations in great detail and also saving a large expenditure for transportation

2 Typical walks in major cities

™ The Classic Walk in Paris (http://classicwalksparis.com/paris/tours/classic-walk) Duration: 3.5 hours

Distance: 4 miles or 6.4 km

The Classic Walk offers a whole overview of Paris Virtually most of major sites in the city center are covered:

- The Eiffel Tower: the symbol of Paris

- Notre Dame: the most famous cathedral in the world

- Napoléon’s Tomb: the resting place of the most famous Frenchman in history

- Louvre Museum: one of the grandest museum in the world, include the most famous works: Mona Lisa, Venus de Milo…

- Musee D’ Orsay: the museum hosts a world-class collection of Impressionists paintings

- Tuileries Garden: Former Royal Garden in the middle of the city

- Champs- Elysees: the most famous avenues in the world Its sidewalk are lined with café, cinemas, 5-star hotels and shops

™ The French Revolution Walk (revolution-walk)

http://classicwalksparis.com/paris/tours/french-Duration: 2 hours

Distance: 2.3 miles or 3.7 km

The French Revolution Walk will enlighten you to the significance of one of the most important events in modern history Revive the troubled period leading up to some famous events in France

™ Fashion walking tour (http://www.paris-walks.com/crbst_6.html)

Duration: 2 hours

The tour is conducted by the fashion specialists; it is an enjoyable mixture of history, anecdotes, and trivia associated with fashion The tour guide will show you both famous names and introduce you some lesser treasures You also can go inside the shops and purchase what you want

™ Vatican walking tour (http://www.enjoyrome.com/walking/vatican.html)

Duration: 3 hours

The Vatican is one of the most famous interesting and breathtaking beautiful sites in the world The tour will take you to some major attractions as well as some lesser known spots, and provide you a broad base for understanding the history, architecture, and politics of the Vatican

The highlights of the tour include:

The tour covers all the well known sites of ancient and old Rome including:

- Colosseum (interior visit)

- Roman Forum (interior visit)

- Capitoline Hill

- Trevi Fountain

- Pantheon (interior visit)

- Piazza Navona

3 Hanoi with walking tour

™ Hanoi – A legendary city with significant collections of major cultural and

historical attractions

Hanoi – the beautiful capital of Vietnam strategically lies at the center of the triangular basin of the Red River It original named Thang Long (City of the Ascending Dragon) and was first the capital of Vietnam in A.D.1010 With the 1000 years history and culture and the topography of many lakes and rivers, Hanoi have many attractions both cultural, historic and natural ones And it is very potential for walking tour because most of these attractions were located closed to others It means that tourists can visit these attractions by their feet instead of other kinds of transport

ƒ Mentioned about Hanoi, we can not forget many rich historic attractions such as Hanoi Old Quarter, Temple of Literature, Ba Dinh Quarter, Flag Tower, Ho Chi Minh Mausoleum…

Van Mieu – Quoc Tu Giam is a famous historical and cultural relic consisting of the Temple of Literature and Vietnam’s first University The Temple of Literature was built

in 1070 in honour of Confucius, his followers, and Chu Van An, a moral figure in Vietnamese education Quoc Tu Giam, or Vietnam’s first university, was built in 1076

It was the first educational school for royal family members, and it was later opened to talented students The site preserves historical vestiges of a 1000 years old civilization such as status of Confucius and his disciples, and ancient construction such as Khue Van Pavillion, and Worshipping Hall

Another attraction which is also very familiar and attractive with tourists who come

to Hanoi is Hanoi Old Quarter It is a unique antique quarter which represents eternal soul of the city In Hanoi Old Quarter, beside traditional buildings, there are cultural, historic and religious buildings and traditional restaurants Nowadays, the Old Quarter still maintains Vietnamese and Asian architecture and creates a complexity of unique architecture Two examples of cultural and historic buildings which still remained are

87, Ma May Street (built in XIX century with old traditional architecture) and 38, Hang Dao Street (original was communal house built in XVII, now has combination of traditional and modern architecture) Now, in Hanoi Old Quarter, there are walking streets and night markets which were established to promote walking tour

ƒ Being a long-standing urban area, Hanoi is also very well-known with its religious attractions like Quan Su temple, Tran Quoc pagoda, One-Pillar pagoda… Quan Su Temple was built in the 15th century under the Le dynasty According to Hoang Le Nhat Thong Chi, during Emperor Le The Tong’s seign, the Emperor ordered

to construct a building called Quan Su (Embassy) to receive foreign ambassadors to Thang Long Because those ambassadors were all Buddhist, they decided to build a temple on the premises for worship Today only the temple remains In 1934, the General Buddhist Society of Tonkin was founded and choosed as its headquarters One-Pillar Pagoda is a historic Buddhist temple in Hanoi It is regarded alongside the Perfume Pagoda, as one of Vietnam’s two most iconic temples The temple is designed to resemble a lotus blossom, which is Buddhist symbol of purity, since a lotus blossoms in a muddy pond In 1954, The French Union forces destroyed the pagoda before withdrawing from Vietnam after the First Indochina War, it was rebuilt afterwards

ƒ Beside those cultural and historic attractions, Hanoi is also proud of its natural attractions which mostly are beautiful lakes and rivers such as West Lake, Sword Lake, Truc Bach Lake, Red River…

Sword Lake – the beautiful basket of flowers inside Hanoi, a mirror-like green lake with Ngoc Son Temple, The Huc Bridge, Pen Tower in the surrounding is a part of the Red river Sword Lake used to be called Luc Thuy Lake (or Green Water Lake) since the water was green all the year round In 15th century, it was named Hoan Kiem Lake (Sword Lake) after the legend of Emperor Le Thai To

Cuisine of Hanoi is also very attractive It is not only diversified but also simple and sophisticated, for example Thanh Tri Cuon Cake, Pho, Com (green rice), Bun,… And it

is considered as a attraction to attract tourists come to Hanoi

™ However, its inner transportation is inappropriate and problematic for

designing walking tours

It will be difficult for a visitor to enjoy a walking tour in Hanoi without an appropriate transportation system It cannot argue that because this is a walking tour

then feet will be the only one means to travel Besides, a transportation system is developed to add more conveniences for traveler

First of all, the most important factor that, in order to walk along a street, is pavement In Hanoi nowadays, many streets have a large and nice pavement not only in using mean but also in the aesthetic mean However, in the streets that almost every visitor to Hanoi will walk in maintain a situation of bad pavement, those are Old Quarters In the survey we have been conducted, many visitors claimed that pavements

in Old quarters are very narrow; sometimes they have to walk in the road instead of the pavement

The road system in Hanoi is the second significant factor Besides some main roads for instance Trang Thi, Le Dai Hanh, etc which are very huge, streets in the blocks are small and crowded Too many transports circulation around the street make visitors feel terrible and scared

In order to travel to the walking streets, travelers need some transports to take them from their hotels or from airport to Hanoi’s center Some will be suggested as taxies, buses, and motor taxies

Taxies will be the most useful transport It can be easy to order, able to pick up a number of people, convenience for changing the route if necessary, cheap by international standards and a safe way to travel around at night Average tariffs are about 10,000d per kilometer

The bus systems in Hanoi have improved in the past few years but are light years behind Hong Kong and Bangkok and, in general, buses are not a practical way to get around town Even this kind of system is much cheaper but obviously it has more disadvantages than taxies

Getting around by motor taxies is easy as long as you don't have a lot of luggage It

is not a convenience transport for traveler, because they have to negotiate the price beforehand

Beside those transports above, traveler can find cyclo, or hide a motorbike or

bicycle to enjoy their moment in Hanoi

III RESEARCH METHODOLOGY

In order to fulfill this research, two surveys and one observation were conducted in two different days and all data colleted are quantitative

The first survey was carried out on 1 May 2010 from 8.45am to 11.30am around Sword Lake in the form of personal interviews One or two researchers interviewed one tourist and took note what he or she said In this survey, 17 tourists, both Vietnamese and foreigners, were randomly chosen to answer various open-end questions ranging from their motivation to travel, their likes and dislikes in Hanoi, their evaluation about Hanoi attractions, transportation, and especially about Walking tour Basing on experiences from many surveys before, the research group decided to hang on a banner with slogan “if you love Hanoi, please tell me” to attract tourist’s attention first, then

asked them to join the survey instead of blocking them on the way and ask for their cooperation Furthermore, everyone who participated in the survey received small gift that is a couple of Vietnamese in traditional dress As a result, the majority of interviewees were people who approached us first due to their curiosity and then expressed their willingness and happiness to take part in the survey Thus, we got very good responses from tourists in this survey

On 11 May 2010, the research group divided into two sub-groups to conduct both a survey and an observation simultaneously from 4pm to 6 pm The first sub-group carried out the survey around Sword Lake and in front of Hapro TIC, a free information center in Dinh Tien Hoang street in the purpose of figuring out how tourists evaluate the quality of information system in Hanoi that is one of key factor influencing walking tours Once again, a semi-structure interview with open-end questions was used to collect quantitative data Especially for the tourists who were out of Hapro TIC, besides questions relating to general information system in Hanoi, the research group focused

on asking them about their assessment on the quality of information given by this center At the end of each interview, respondents were asked to provide their personal information comprising name, nationality, and email address to make valid references for the research

At the same time, another sub-group conducted observation inside Happro Tic center to evaluate attitude and working style of the staff, facilities and design of the center In addition to observing, we also played a role a person who need information about some destinations in Hanoi to have short interview with the staff so as to evaluate the quality of information they provided to tourists Moreover, we also collected many cards and brochures there to appraise effectiveness of these materials

Right after each survey and observation, all information collected was entered in

database in order to make deep analysis

IV FINDINGS

1 Motivation for traveling to Hanoi

Although most of tourists interviewed are repeated travelers, only one-third of them have traveled to Hanoi before However, it is hard for first time tourists to Hanoi to answer the question why they want to travel to Vietnam generally and to Hanoi particularly Some stated that they wanted to be here just for relaxation; some other said they would like to discover Vietnamese culture and history through their travel For those who have visited Vietnam several times before, it is Vietnamese culture, history and especially Vietnamese people who are very friendly and hospitable that attract them

to come back Hanoi As one Japanese tourist who has been to Vietnam six times and in Hanoi three times revealed, he loved Hanoi Old Quarter atmosphere that was hard to describe by word Meanwhile, another American journalist who has ever traveled to Hanoi seven times tenderly looked at the research group and said “I come back here because of you” Noticeably, no matter what their motivations are, Hanoi Old Quarter, Sword Lake, Ho Chi Minh Mausoleum, West Lake, Temple of Literature, and some

Museums where Vietnamese culture and history are deeply reflected are places that they have visited or want to visit the best

2 Likes and dislikes of tourists in Hanoi

Among some common activities that tourists often participate in Hanoi, going shopping and enjoying Vietnamese traditional food are favorite ones of many interviewees They love hanging out Hanoi Old Quarter to watch and purchase small handicraft souvenirs such as wooden objects, toys, silk clothes, brocades for themselves, and/or for their families and friends at home Despite the fact that these products are very nice and Vietnamese, it is strongly recommended by one tourist that different shops had better sell different products in order to make shopping experience of tourists more diverse and exciting Further, one respondent showed his wish for watching the hand-made items making process when going shopping in order to learn more about Vietnamese culture in more creative and exciting way This can be a good recommendation for tourism makers to add more value for tourist during their trips In terms of food and beverage, the great majority of tourists asked expressed their preference on traditional Vietnamese dishes; even some gave great praises for authentic Vietnamese food Interestingly, one Japanese tourist could name some well-known Vietnamese food such as pho, spring roll, vermicelli and grilled chopped meat in Vietnamese Besides, it is not surprising that every tourist asked stated that they would like and always come to small family-own shops to enjoy their meals instead of going to luxury restaurants where Vietnamese taste seems to be weaker than the former Attentively, some of them asked showed their good experiences on enjoying food from street vendors like Vietnamese people often do In contrast to many foreigners who feel afraid of eating food sold in the street because of hygiene matter, these tourists expressed their willingness to expose to very Vietnamese lifestyle It is quite interesting that one Greek journalist revealed bread with pâté in the street was his favorite breakfast everyday in Hanoi

In addition to some quite popular activities that tourists want to take part in during their stay in Hanoi, some respondents who are male journalists and engineer, have special interests in learning more about architecture, particularly French buildings in Hanoi This interest possibly pertains to their jobs and genders Thus, those prefer spending time walking around Hanoi Opera house and its environs to satisfy their like to going shopping in Hanoi Old Quarter or in open markets

However, in addition to several compliments on attractiveness of many beauty spots, of Vietnamese culture and history, and friendliness of the local people in Hanoi of tourists, there are some comments on keeping public sanitation in Hanoi because they saw many litters scatter on the ground Therefore, Hanoi would be more beautiful if both everyone is more aware of keeping environment clean and the local authorities implement stricter regulations to rule their behaviors

3 Opinions on walking tour in Hanoi

When being asked about whether they had ever heard or joined in a Walking tour before, roughly a half of them replied “No” because they seemed to be unclear about what a walking tour was Most of them appropriately thought about traveling on foot

without using any kind of transportation during the tour This reveals that walking tour

appears to be a quite new term for tourists even though they have ever experienced it many times or were joining it at the time the survey was being carried out After being explained shortly and clearly what a walking tour was, a small number of them expressed their willingness to combine public transportation means with walking in the trip as provided that they have a good guide As several tourists complained, Vietnamese tour guides are now quite bad at both foreign language and tourism knowledge For this reason, tourists often rely on their guidebooks and personal maps

In fact, currently, most of time, foreign tourists travel on foot and sometimes take a taxi rather than using other public transportation means like bus, cyclos or motorbikes to travel in Hanoi because of many reasons Firstly, the traffic in Hanoi is too heavy, dangerous and different from their home countries for them to travel Even some Vietnamese tourists asked also expressed their dislike in traveling by these modes For this reason, one tourist suggested that Hanoi should block some streets suitable for walking in certain holidays in order to give tourists a chance to enjoy their own walking tours without any disturb of heavy traffics Besides, one Japanese civil engineer gave a comment on improving infrastructure to make traveling on road more smoothly Moreover, the instruction of each bus routine at bus stops is in Vietnamese only so that foreign tourists feel very hard to travel by bus Worthy saying that the poor instruction

in bus stops as well as from the board hung on the bus makes Vietnamese travelers misunderstand and lost many times Additionally, one tourist even exclaimed “terrible” when he was asked about the signpost on the roads because he did not see any signposts during his stay in Hanoi Actually, there is the extreme shortage of signposts on the road not only in multilingual but also in Vietnamese that makes tourists find more difficult in their trips It is Vietnamese people who feel confused when looking at the signposts in Vietnamese because they are simply the names of streets or roads without any arrows that show directions Thus, all of the foreign tourists asked stated that they completely rely on their guidebook and personal map to find the way However, some tourists who used taxi to travel complained that they felt dissatisfied because of being differently by taxi drivers

In the respect of ideal time and the length of walking tours, the great majority of tourists asked want to join a walking tour in autumn and spring, especially in the morning when the weather is cool and fine A minority of them was willing to travel in afternoon summer when the sun burns less hot According to the majority of respondents, they would like to take part in a walking tour that lasts from 0.5 to 3 hours per day only However, some other were willing to participate in a tour that takes 8 hours in maximum or even the whole day starting from the morning until the night

Only one out of 17 tourists desires to join a walking tour at night This is possibly attributable to the shortage of night activities in Hanoi Thus, firstly, it is a good idea if there are different walking tours designed with different themes and itineraries according to seasonal changes and time in a day in Hanoi Next, in order to encourage tourists to take longer walking tour, it is highly recommended that besides famous and popular water puppetry performance in Hanoi, more entertainment activities bearing strong Vietnamese characteristics like bamboo singing (ca tru performance), and Xam singing, traditional music instruments like monochord, Vietnamese two-chord fiddle can be performed around Sword Lake in certain days under the control of the local authority to make Hanoi have more distinctive melody Equally important, some Vietnamese traditional folk games such as man chess, swinging; walking on stills may

be organized in parks to arouse the image of very traditional Vietnam in the heart of busy Hanoi Furthermore, a night walking tour with food and beverage theme will offer tourists very great nights in Hanoi In addition to 30% some of tourists asked love traveling with family and friends, other expressed their want to travel with strangers who may come from different countries with different languages There are some reasons for this Different from some tourists who like traveling with strangers because they are confident in speaking some foreign languages; most of respondents show their willingness to and interest in learning new things from new friends coming from different cultures For them, using body language is the best solution Especially, some

of interviewees wish to have their travel partners are the local people so as to learn more about Vietnamese people and have better guidance in some cases Furthermore, except for one-third of tourists surveyed is reluctant to travel with kids under 10 or the old people due to their believed that different tastes and health conditions between this group and them may affect their travel negatively, the majority of tourists expressed their readiness to travel with such partners

4 Tourist information is the main drawback for promoting walking tours in Hanoi

™ Guidebook and website are the main tourist information channels before the trip

Among the above problems, the most outstanding issue is about information system for tourists Most of the tourists stated that before traveling to Vietnam, they only obtained needed information about Vietnam from guidebooks During their journey, they also utilized their guidebook as a direction tool to find the way to the destinations

In addition, they also base on other sources of information, for instance their relatives, friends, and searching on Google Only few tourists have ever visited Vietnam websites

to find out information, however they did not highly appreciate quality and value of these websites According to Steven Bugg, a tourist from Australia who traveled to Hanoi to visit his relatives, some tourism websites of Vietnam in general and Hanoi in particular upload too general information about destinations Moreover the information

is mainly for the purpose of commercial such as selling tours, hotel rooms Therefore the information appears too bias to him and he can’t absolutely trust in the information for the tour To prove for his statement, we tried visiting some tourism websites of

Vietnam such as www.dulichvn.org.vn, www.vietnamtourism.gov.vn,

www.vietnamtourism-info.com, www.vietnam-tourism.com.vn, http://www.hanoitourism.gov.vn, and also read Vietnam guide book online of Lonely Planet to compare the information from two sources Actually, these websites only contain some basic information about tourist agency, restaurants, hotels, and typical attractions They lack a very important part about transportation systems which helps tourists to find the way from the destination to other destinations on your own While, the guidebook is possible of providing more detailed information about how and by what means of transportation which can help them to travel from this destination to other destination This information

is particularly important for developing walking tour for self-guided tourists

™ Provision of tourist information in Hanoi could be improved

During their trips, tourists can base on a variety of sources to search information for their trips such as signposts, hotels, information centers, tour guides, or local people However, in Hanoi, most of these sources have not been developed to serve for walking

tourists effectively

In term of signposts system, in some famous destinations for walking tour in the world such as Paris or Romeo, signposts systems are considered as an important element for the success of these destinations, they are designed and positioned appropriately for all tourists being able to find their way without difficulty Mr Cuong, lecturer of Hanoi University said that when he traveled to Paris, he could find the way

to all destinations by himself just by basing on the direction of the signposts However,

to Hanoi, signposts system actually is an imperative issue Mr Steven Bugg claimed that

“It is very terrible, should keep it better” As well, the other tourists complained that they rarely saw the signposts on the road; furthermore all of them are in Vietnamese without translation into English and other languages Therefore they had to find the way

by their own map and guidebook and sometimes they might loose their ways

Another tool which tourists can take advantage of asking free information is the information center In Hanoi, there are two centers like this: one located in Noi Bai airport and the other located in Dinh Tien Hoang Street named Happro Tic However, when we interviewed to 3 tourists around Hoan Kiem Lake, all of them said that they have never visited as well heard about the center at the airport In our subject opinion, location of this center is not proper due to the reason that when tourists get off their flights, they have searched enough information to get to their hotel; therefore they want

to come to the hotel immediately for check-in process before doing the other things Hence, most of them ignored the center Whereas, in the center of Hanoi there is only one center which is located near Hoan Kiem Lake, the other areas such as Ho Chi Minh mausoleum and West Lake also very popular for tourists haven’t any centers which can support for tourists to find the information

About Hapro Tourism Information Center or Hapro TIC (www.ticvietnam.com)

which is established in 2006, it has contributed a big role in providing tourists with free

information and knowledge of Hanoi in particular and Vietnam in general Hapro TIC

has two other centers in Da Nang and Ho Chi Minh cities Hanoi-based Hapro TIC is mainly composed of an information service section with 2 agents (4 in total with 2 work shifts), free Internet access section, tour booking services, and Vietnam culture and tourism books for sale Besides, Hapro TIC in Hanoi also rent its center to other extra services including Hanoi Moment’s souvenir boutique, Asiana Travel Mate’s travel services, Gloria Jean’s Coffees, and currency exchange service by Lien Viet Bank Hapro TIC provides free information service assists travelers to find information and direction faster, which helps develop Hanoi tourism industry Besides, its good facilities support travelers to search for information like Internet free access, free maps, and stocks of various kinds of pamphlets and brochures Additionally, it also has a group of English-proficient agents with good behavior, attitude, knowledge and communication skills All interviewed customers were quite satisfied with the provided effective information or service and want to use it again

Despite all its strengths, Hapro TIC also incurs some problems in its operation process English and Vietnamese are the main languages used to assist travelers; therefore, targeted customers are limited to only Vietnamese, English native speakers and ESL speakers Furthermore, four agents in free information section is a modest number compared to an increasing number of walking travelers to Hanoi

In addition, this center also faces with problem of outside decoration and location The center place is difficult to be recognized among thousands of shops and stalls on Dinh Tien Hoang Road, while its decoration is not outstanding enough to catch up tourists Hence, tourists can mistake it with other shops and ignore them Even when we asked a tourist come from Melbourne, Australia – Mr Greg Woods who stood in front

of the tourism information center, he did not know about this center The reason he stood there only because he wants to use free internet of the center to contact with his relatives And even us, when we came there to collect information, we also had to spend some minutes to find this center, because the company’s name board is hang up too high compare with the view of the viewers; moreover it is hidden by the trees in front of it which has hampered the service access Owing to these reasons, when we interviewed three tourists around Hoan Kiem Lake, none of them know about this center

Besides Happro Tic, around Hoan Kiem Lake there are also some others small stores named information center; however, in reality it is only for the purpose of booking tour but not providing free information for tourists

The other source of information which tourists can get is from their hotels However, the tourist who has asked his hotel to get information said that the hotel just provided him with general information and they still had to base on the other sources This is also a weakness which needs to be improved more for a better tourism information system in Hanoi to develop walking tour as well as other forms of tours

™ Conclusions

Drawing from the findings, there are some problems to develop WT in HN and the problem of ineffectiveness information is the most outstanding one In brief, information system includes these main following problems:

- Shortage of websites about Vietnam and Hanoi tourism with detailed tips and advice for walking travelers

- Ineffective signposts system both in quality and quantity

- Lack of free information center for walking tourists

- Unqualified tour guide both in foreign languages and tourism knowledge

V RECOMMENDATIONS

Drawing from all findings above, there are some recommendations to improve the ineffectiveness of providing information for traveling in Hanoi generally and for developing walking tour in Hanoi particularly First, it is highly appreciated if all of official tourism websites provide more detailed information about traveling in Hanoi to tourists, especially information related to events, activities that celebrate up coming 1000-year-old Thang Long anniversary

Second, the large number of signposts with detailed instructions in some popular foreign languages besides Vietnamese such as English, French, German, Spanish, Japanese, Korean, Chinese need to be installed in higher density in order to help travelers locate themselves as well as find the way easily In addition to signposts, it is a good idea to put some big map boards in some places which have large spaces like Tokyo does Furthermore, it is necessary to set up multilingual instruction boars and maps at every bus stop to encourage tourists to use public transportation more and more Next, both state-owner and private organizations should join hand to establish more tourism information centers that follow Hapro TIC model around Hanoi, especially in places where are highly concentrated by tourists such as around West Lake, Temple of Literature, museums, parks, markets… Further, in addition to professional staff, it is students who are major in tourism or culture, history from Universities and colleges in Hanoi could contribute to the success of these centers by work there in form of internship More to the point, it is better if the staff in these centers can speak some popular foreign languages such as French, Spanish, German, Japanese, Korean, Chinese besides English only because those from these nations constitutes a large proportion in the total number of tourists to Hanoi now

Additionally, the Hanoi authority is strongly recommended to require all taxi drivers

to post the tariff up clearly, then regularly examine their odometers as well as strictly punish lawbreakers to assure the rights and reinforce belief of travelers Moreover, information pertaining to taxi price as well as that of other means of public transportation should be placed both in websites and map boards on the roads

Equally important, Hanoi should have more rigid regulations for tour guide qualification In order to be a tour guide of Hanoi, a person has to receive a certificate

that demonstrates both his foreign language skills and tourism knowledge Hanoi may also establish a forum for tour guides to update information of Hanoi and to learn more from one another as well

VI FOUR SUGGESTED TOUR PROGRAMMES IN HANOI

1 A walk through three religions of Vietnam

Our first suggested itinerary is “Three integrated religions in Vietnam” tour which introduces history and influences of three main religions in Vietnam They are Confucianism, Taoism, and Buddhism First, tourists gather in front of Temple of Literature (Confucianism) to discover the first Vietnamese university Then we move by bus or bike to West Lake area where we visit Quan Thanh Temple (Taoism) and Tran Quoc pagoda (Buddhism)

Religions in Hanoi have not been totally discovered and studied This walking tour can give travelers unique amazing experiences of Hanoi religions’ philosophies and history The walking tour will be carried out in the morning or afternoon Specially travelers can take rest time for shopping, snack, and entertainment at West Lake area

2 A night walk in Hanoi’s Old Quarter

The purpose of this walking tour is to enjoy the peaceful, quiet and glistening atmosphere of Old Quarter’s nightlife and enjoy night dishes in Hanoi, which have potential for main tourism products of Hanoi Our tour will have the following itinerary

in order: first night market of Old Quarter (from Dong Xuan market and Hang Ngang Street to Hang Dao Street), then to Ta Hien Street, Hang Bong Street, Hang Gai Street, Tong Duy Tan Street and finally Cam Chi Street Taking part in this itinerary, walking tourists can go shopping in night market of Old Quarter, and then visit Ta Hien Street, which is famous for beer bars for foreigners Afterward, tourists can enjoy Hanoi’s night nosh on Tam Thuong gate, Hang Gai Street, Tong Duy Tan Street and Cam Chi Street, which are cuisine streets of Hanoi, and To Tich and Ly Quoc Su Streets Here you can enjoy baked cuttle-fish, Pho, fried fermented pork roll, noodle, pickled fruit juice, etc It is noted that night market in Old Quarter only open on Saturday and Sunday It means that this tour will operate on Saturday and Sunday The reasons why

we want to suggest this tour because walking tour in night will avoid many problems like too heavy traffic, dirty dust and vendors which a walking tour in day will suffer In addition, in summer, the weather of night is better than that of day

3 A walking tour for architecture lovers

This walking tour program is intended for people in love with Hanoi architecture which is a blend of French and Vietnamese Its time schedule is from 8 a.m to 8 p.m

Temple of Literature (Confucian-ism)

Quan Thanh temple (Taoism)

Tourists will start walking from Sword lake in Dinh Tien Hoang Street, turn to Ly Thai

To Street to visit Hanoi Opera House, then to Ngo Quyen Street where The North palace (Bac Bo Phu) are situated Next, tourists travel along Tran Hung Dao Street where many French-style buildings exist to Phan Boi Chau Street where they can enjoy delicious lunch in Quan Ngon restaurant After having lunch, tourists can travel to Dien Bien Phu Street to visit Hanoi Flag Tower Contemplation, come to Hoang Dieu road where Thang Long Imperal City is located, and from Phan Dinh Phung road to Hung Vuong road to visit Presidential palace, Ho Chi Minh Mausoleum, and One Pillar Pagoda is next door From Hung Vuong road, tourists turn to Tran Phu street and travel

to Tong Duy Tan Street and Cam Chi Alley by bus or on foot to enjoy dinner The tour

will end at Cam Chi Alley

4 A fashion and art themed walking tour in Hanoi

The walking tour is likely to last 3 hours from 8 a.m to 10 a.m Walking travelers will begin the trip at Apricot gallery on 40B Hang Bong Street, which is one of the capital's most successful galleries gathering the top-ranking artists from different generations Next, Tan My Design in 66 Hang Gai Street is a new shopping experience

in Hanoi, which combines feelings of old Hanoi with modern contemporary architecture and design Tan My Design features some of Vietnam’s finest designers – Fashion, Accessories and Home wares as well as Tan My Design’s own brand Then tourists can have a chance to visit Khai Silk in 96 Hang Gai Street, one of the Vietnam’s most successful chains of silk boutiques which specialize in clothes and other silk products Afterward, tourists travel to Vietnamese House on 92 Hang Bac Street for a collection

of gems, handicrafts, small ceramics, etc and the final destination is Furniture gallery

on 8B Ta Hien Street for furniture products The tour program may include some services such as English speaking tour guide, shopping, Hanoi’s finest espresso, and light meals at Tan My Design café For more information for this walking tour program, tourists can refer to these websites as follows:

http://www.culturalprofiles.net/viet_nam/units/683.html, http://www.tanmydesign.com/, http://www.hotels-in-vietnam.com/hotels/Travel_Vietnam/shopping-in-hanoi.html

VII CONCLUSION

In this research report, we would like to portray the general picture of walking tour

in Hanoi, Vietnam From the first step, we provided you with our research methodology and the process of finding Problems for walking travelers have been deeply analyzed and synthesized to offer you the most insightful view on Hanoi tourism service situation, especially its information system and effectiveness Meticulous recommendations are also given with the best consideration many factors of information

on websites, street signposts, tour guide qualification, and models of free information center multiply Unfortunately, due to the lack of human capacity and time resource, the report may contain some unavoidable errors or mistakes To some extent, we, however, believe that this report can be helpful

REFERENCES

No author, “Walking tour”, [online] Available at URL:

http://en.wikipedia.org/wiki/Walking_tour (Accessed 10 May, 2010)

No author, “The Classic Walk”, [online] Available at URL:

http://classicwalksparis.com/paris/tours/classic-walk (Accessed 10 May, 2010)

No author, “The French revolution walk”, [online] Available at URL:

http://classicwalksparis.com/paris/tours/french-revolution-walk (Accessed 10 May, 2010)

No author, “Fashion walks”, [online] Available at URL:

` http://www.paris-walks.com/crbst_6.html (Accessed 10 May, 2010)

No author, “Vatican walking tour”, [online] Available at URL:

http://www.enjoyrome.com/walking/vatican.html (Accessed 10 May, 2010)

No author, “Ancient and old walking tour”, [online] Available at URL:

http://www.enjoyrome.com/walking/ancient.html (Accessed 10 May, 2010)

No author, “Vietnam cultural profile”, [online] Available at URL:

http://www.culturalprofiles.net/viet_nam/units/683.html (Accessed 12 May, 2010)

No author, “Welcome to Tan My Design”, [online] Available at URL:

http://www.tanmydesign.com/ (Accessed 12 May, 2010)

No author, “Shopping in Hanoi”, [online] Available at URL:

http://www.hotels-in-vietnam.com/hotels/Travel_Vietnam/shopping-in-hanoi.html

(Accessed 12 May, 2010)

Tic Tourism information center, “The window to Vietnam”, [online] Available at URL:

http://www.ticvietnam.com/en/ (Accessed 12 May, 2010)

No author, n.d, “Tourist Attractions”, [online] Available at URL:

http://www.hanoitourism.gov.vn/home (Accessed 10 May, 2010)

Frommer “Introduction to Hanoi”, [online] Available at URL:

http://travel.nytimes.com/frommers/travel/guides/asia/vietnam/hanoi/frm_hanoi_019701000 1.html (Accessed 10 May, 2010)

ROLE OF AUDIT IN VIETNAM

Written by: Pham Quynh Anh, Nguyen Thi Thu Phuong (1KT-08)

Nguyen Thi Lien, Le Thi Huyen Trang (2KT-08)

Vu Thi Ngoc (3KT-08), Dang Anh Thu (1KT-08)

Supervisor: Chu Huy Anh ABSTRACT

Independent or external audit is playing an increasingly important role in Vietnamese economy Not only does it strengthen investors ‘confidence in enterprises’ businesses but independent audit also enhances the managerial effectiveness by providing the managers with advisory Based on the secondary data, this research gives an overview of the development and scale of Vietnamese independent audit industry Especially, the study focuses on the roles of independent audit in Vietnamese economy, the achievements it has gained and the drawbacks it has overcome From these points, some recommendations are suggested to improve the independent audit practices in Vietnam

Part A: Introduction

In recent years, Vietnam’s economy has been rapidly developing with the integration into the world economy As a result, the demand of audit in general and independent audit in particular are increasingly higher and higher Despite being a new profession in Vietnam, the number independent auditing firms has been rising over the years Their efforts are to bring about transparent financial statements, ensure the compliance of the laws, and help investors make accurate decisions Although the profession is still young and still needs a lot of improvement, independent audit has made many undeniable contributions to the development of a healthy economy in Vietnam Particularly, the purpose of our research is to give a panorama of auditing in Vietnam with scale, development, competitive advantages and disadvantages of Vietnamese auditing firms, then analyze the main roles of auditors to the economy and

to other interested parties Therefore, our research is divided into three main contents: the overview of Vietnamese independent auditing, the development and roles of independent auditing in Vietnam, and recommendations to the development of Vietnamese auditing system in the future

Part B: Findings

I Overview of the audit in Vietnam

Audit is a large topic that the research cannot focus on all sides of the field,

therefore, it only concentrate on Vietnam’s external audit, which is getting more and more interest of public today

1 Overview of independent audit of Vietnam

1.1 Development

Independent audit is one of 3 types of audit classified by subject, which includes State audit and internal audit Independent audit is periodic or specific purpose (ad hoc)

audit conducted by external (independent) qualified accountant(s) Its objective is to determine, among other things, whether (1) the accounting records are accurate and complete, (2) prepared in accordance with the provisions of GAAP, and (3) the statements prepared from the accounts present fairly the organization's financial position, and the results of its financial operations Therefore, it is necessary for businesses in a market economy that is typical of competition Being aware of the important role of independent audit in the development of the economy, on May 13

1991 the government decided to establish two independent audit firms, namely Vietnam audit company (VACO) and Vietnam audit service company(ASC) according to decision 164-5-TC/QD/TCCB, now Vietnam audit and accounting company (ASSC), which initiated the independent audit practice in Vietnam 19 years has seen the dramatic growth of Vietnamese independent audit in both quantity of firms and auditors force and range of service

Gro wth in re ve nue o f Vie tname s e

inde pe nde nt audit indus try

Figure 1: Growth in revenue of Vietnamese independent audit industry

Figure 2: Scale of Vietnamese Independent audit

Two graphs above illustrate the expansion in scale of Vietnamese independent audit

in terms of revenue and quantity of firms as well as the increase in certified auditors

1.2 Scale

Top ten audit firms in Vietnam 2009

333,669 323,089 273,130.41 266,324 89,616

77,384 62,134 39,113 37,200 31,805

KPMG E&Y PwC Deloitte A&C AASC G.T AISC Mazars BDO Vietnam

Revenue (million VND)

Source: VACPA

Scale of Vietnamese Independent audit

13 531

1234 1500

2 34 108 171

0 500 1000 1500 2000

Currently, independent audit firms are classified into 3 types: 136 limited companies, 23 member firm of international network, 6 foreign companies, and 6 partnership companies, and vary in scale While foreign companies account for 55% market share, the rest firms are small and medium enterprises In terms of revenue, in top ten audit firms earning the biggest revenue, 5 of them are foreign companies and 5 ones are member firms of international network

2 Legal framework for Vietnamese audit practices

Up till now, legal framework established for ground rules in Vietnamese independent auditing has consisted of decrees and circulars and regulations of the government and Ministry of Finance (MOF), Vietnamese standards of auditing as well

as accounting law

2.1 Decrees, circulars and regulations relating independent audit

The Vietnamese government issued decree 105-2004 and decree 30-2009 to regulate auditors, audit firms, the validity of audit results, the cases that are required to

be audited and other things relating to independent audit According to these decrees, in order for an audit firm to be established and to operate in Vietnam, it must meet the following requirements:

1) The firm must employ at least 3 auditors holding the auditing license, including Director or General director If the firm is a joint-venture firm or a limited liability company, Director or General director must own at least 10% of chartered capital Director or General Director must have 3-year experience of auditing after gaining the auditing license and must not hold administrative or managerial position in other firms 2) Within 30 days since obtaining operating license, the audit firm must inform MOF of the establishment of the auditing firm and the list of auditors employed by the auditing firm

3) While operating the firm must have at least 3 full-time auditors Violating this condition in 6 consecutive month, the firm must stop provide auditing service

Besides the above decree, the MOF issued the circular 60/2006 to give the detailed guideline of standards, conditions to establish and operating of auditing firms

In addition to decrees and circulars, regulations are imposed to control the quality of accounting and auditing service and to select the auditing firms to undertake the audit of the stock issuers, listed companies and securities trading companies

2.2 Vietnamese standards of auditing

Standards of auditing are basic principles of auditing profession and relations derived from the auditing process To date, the MOF has issued 37 standards in 7 batches to offer auditors guidelines and directions to apply

In response to the development and growing role of independent auditing, the independent auditing law has built and it is going to be passed by National Assembly in May 2010

3 Pros and cons of Vietnamese auditing

3.1 Competitive advantages of Vietnamese auditing

As the globalization and the integration of Vietnam into the world market, Vietnamese auditing system has developed as well as massively increasing quantity of auditing firms This leads to a fierce competition among auditing firms, especially between Vietnamese ones and foreign ones in way of involving customers In one current statistic, “these foreign firms, Ernst & Young Vietnam, KPMG Vietnam and PricewaterhouseCoopers, serve many large multinational companies and together with Deloitte Vietnam, hold a 55 percent market share” (2010, audit giants raise eye-brows with loss report) Therefore, only residual 45 percent of market share is for domestic firms, which requires them to make differentiation and build their own brand

The first superior point is the low fees of auditing services In the opinions of Bui Van Mai, Secretary General of the Vietnam Association of Certified Public Accountants (VACPA), to the same client, foreign firms in Vietnam often charge a very high fee, 10 times to even 20 times as much as local firms do There are many inverse explanations about this situation In terms of positive attitude, local firms can reduce their cost to charge lower because of the government’s favor and guarantee Meanwhile, beside tax obstacle, foreign firms in Vietnam impose a very high price as taking advantage of reputation from parent companies However, the others think that owing to auditing procedure deduction, domestic firms are possibly competitive to multinational firms, following mistakes in the results Actually, to kill off local firms, many foreign companies also keep price below cost, this leads to a loss of VND 96 billion (US 5 billion) of three biggest auditing firms Therefore, it is undeniable that lower price is a competitive advantage of Vietnamese auditing firms

Secondly, local firms also understand domestic market more widely than foreign ones It is obvious to see that from the option of target customer of the local ones Vietnamese auditing market can be divided into three segments with three main kinds of client: multinational groups, big invested Vietnamese companies, and small and medium scale enterprises Both international accounting firms and foreign auditing firms choose conglomerates, which have large operation and finance scale However,

“Vietnamese accounting firms mainly serve Vietnamese companies Big auditing firms serve big Vietnamese corporations, while smaller firms serve smaller companies which

do not intend to attract foreign investment” (2010, saigontiepthi, Low fees cause auditing firms’ losses) Beside the reason of insufficient technique and human resource, local firms choose this kind of client because they are an expertise in this segment They truly understand characteristics of culture, economic and politics, so they can give auditing services such as financial statements or advisory plans under the Vietnamese law and the government policy

3.2 Competitive disadvantages of Vietnamese auditing

Although Vietnamese auditing firms are now confident to compete with foreign firms, they also have weaknesses that need to be improved After 15 years of growth,

the gap between local firms and international firms has been narrower However,

“According to the Vietnam Association of Certified Public Accountants, local auditing firms are understaffed as there are only around 1,100 certified auditors in the country and just 111 of them have international qualifications On average each auditor has to audit 46 companies and organizations a year” (2010, audit giants raise eye-brows with loss report) It means that our firms are in short of quality and professionalism, also raising difficulty for Vietnamese auditing firms to gain the market share from foreign firms Furthermore, one problem is about reputation and prestige Obviously, international firms have reached worldwide, so they are very famous and believable Meanwhile, local firms are even newly born and developed, and the target market is only domestic clients, which makes us less competitive As a result, in the programs out of border, international firms are prospective

To improve these main weak points, local firms need to upgrade quality of services, technique, and human resource Many firms become members of big international auditing firms to have support from parent companies Other firms cooperate to help each other with holding seminars, workshops of professional skills It is also the main way of development in Vietnamese auditing firms for the time going

II Role of external audit

The market economy requires all enterprises, which operate in all sectors, must have accurate, timely, and reliable financial information All annual results of operation of all enterprises are reflected on financial statements including: balance sheet, income statement, cash-flow statement, and presentations of financial statement Because of many different causes, the business- owners who are in charge of issuing financial statements want to conceal the loss or weak points of financial results Conversely, those who are interested in financial results and financial situations of enterprises (investors, shareholders…) want honesty and transparency Those factors lead to formation of independent audit companies The independent audit companies have highly professional staff to providing reliable information for both internal and external users

1 For internal users:

Audit plays an important role in operating business of any enterprises of various types and sizes

Firstly, the managers of the enterprise need honest and transparent information on financial reports to decide right actions in all phases of management It is obvious that business owners cannot control all the thousands and thousands of financial transactions happen in the enterprises Only an audit can provide such information: the receipts of capital, monitoring and managing all the business activities

Secondly, independent auditors contribute professional guidance and improve accounting activities in the companies All activities, especially financial activities are the combination of the various specific transactions Whereas, the regulations and policies from the government always change in the different period of time The

auditors’ comments will help business owners to detect errors and violation of law It not only helps businesses limit the risk but also find out potential financial strengths in the internal business

Last but not least, audit ensures the transparency of financial information of the companies At the present, Vietnam is implementing open door policy, multilateral investment both not only in domestic but also oversee so the government is very interested in attracting investments from abroad (direct and indirect) These foreign investors always require audited financial statements to evaluate exactly the financial situation of the companies, which they intend to invest It is said that the transparency is the most valuable asset to the enterprise itself When a company can be trusted with by investors, business partners, it will create better conditions for raising capital, finding the potential business partners, obtaining bank loan, etc

2 For investors

Transparency in financial reporting is extremely important especially to investors Investors make investing decisions based on financial reporting of the companies Transparency of the financial statements is essential for financial decision making of investors The more transparent information investors get the less risk they can encounter Investors would make noise if they rely on dubious financial statements

It can be argued that one of the most reliable resources for investors is independent audit The main purpose of an audit is to enhance the transparency of financial situation and management system by providing written reasonable assurance from an independent source It should provide a “true and fair view” of financial statements in accordance with an accounting standard

In the process of preparing and declaring financial information, there are a lot of problems arising such as benefit contradictions and differences in information using objectives Those factors lead to lack of reliability and certainty in accounting information In fact, a lot of companies intentionally make financial statement beautiful

by “cooking books” to attract investment or capital The reason for this practice is that the company is under pressure to achieve the objectives and plans of revenues, profits or maintain market shares To create profitable figures, they would find many ways to overstate revenues and assets, understate expenses and liabilities, or make improper use

of reserves This is not too difficult to implement because the accounting standards are flexible, allowing the application of various accounting methods and many professional assessment of the subjective view of the managers Some common practices the companies often abuse are transactions hiding, accounting standard variation or timing obscurity and so on The “create” practice is quite difficult to be detected by investors, because investors normally do not have adequate level of profession to understand financial information Obscure statements also hide the level of debt, thereby also hiding potential bankruptcy of the company Even, in many cases, it is difficult to examine whether accounting information is right or wrong Therefore, investors really need professionalism and credibility from the third party-independent audit

In recent years, due to rapid economic growth, there are more and more commercial and financial frauds in Vietnam Although these fraudulent were not as serious as the cases of other countries, they have had negative impact on Vietnam economy and created bad publicity on Vietnamese companies especially the ones listed on the stock market According to Stox.vn statistics, as of 20.4.2009, of 357 listed companies, at least 194 companies have a difference of business results before and after auditing For many companies, difference between business operating results was quite large (over 10%) Some typical example can be mentioned are financial fraud of Bong Bach Tuyet Company, Bien Hoa Join-stock company- Bibica, and the latest case come from Vinaconex with 263,292 billion VND difference between before and after auditing financial statement In this situation, the role of audit becomes more and more important

In summation, independent audit plays an important role in public and investing community It helps to ensure the transparency of financial information, which is crucial for investment decision It also contributes to the consistency of economic growth

III Achievements and scandals of Vietnam’s audit

1.2 Promulgation of ethical standards in Accounting and Auditing practice

Standard of morality is a sensitive concept of any industry existing in society, in the field of accounting and auditing this standard is extremely important and required high level According to Ms Trinh Hong Nguyet, General Secretor of Vietnam Association

of Certificated Public Accountants (VACPA), the Standard of morality is built to bring the independence, objective, prudence, and confidentiality Declared in December 1,

2005, the principles are the first official correspondence, which consists of a variety of rules and guidelines applying the standards of morality for the accountants as well as auditors in order to make the profession of the auditing in Vietnam

1.3 The transformation of management model and ownership of auditing enterprise

The decree 105/2005/NP-CP on independent auditing has exposed some inadequacies As a result, the Prime Minister issues the decree 113/2005/ND-CP that

amends and adds a number of articles in the previous one It specified that auditing enterprises might be established and operated in one of four types of entities, which include limited liability company, partnership, private enterprise, and enterprise under

the Law on Foreign Investment in Vietnam Accordingly, auditing firms with foreign

owners will always be founded and operated as limited-liability model under the

Foreign Investment Laws There will be no joint stock company and no state-owned

enterprise The transformation from stated-owned model to one of the four types above

is not only compulsory but also imperative for businesses to improve the management capacity and ability to compete The renovation enhances the independence, objectivity,

transparency It satisfies the innovation requirements of the Law on Auditing and the

requirement of global economic integration According to Ms Ha Thi Thu Thanh, CEO

of Deloitte Vietnam Company limited, transformation of ownership types is judged as a crucial step forward for each firm as well as for the general development of audit in Vietnam

1.4 The formation of website vaa.vn

In March 2007, the website of Vietnam Association of Accountants and Auditors

(VAA) was officially online at www.vaa.vn Not only be an official information channel

about accounting and auditing in general, VAA in particular, but the website also increases the interaction between domestic and foreign companies Moreover, it is a

new tool for VAA to manage the practicing of accounting In fact, vaa.vn is considered

as a useful information resource about auditing and accounting It provides a huge amount of updated news relating to the technical areas of accounting an auditing and the entire business community In addition, there are varieties of guideline for preparations and mock exams for the practicing certifications available on the website for anyone interested in accounting and auditing

1.5 Lays of foundation of auditing & accounting in Vietnam according to international standards

According to VACPA’s statistics, there are more than 150 auditing enterprises and 1,100 practicing auditors Only a number of businesses develop their own internal audit program The scale and quality are quite different among the programs International audit firms also implement their own audit program In Vietnam, it is a relatively complex task, especially for small companies Consequently, based on the revised International Standards on Auditing, which are to be applied from this 15 December

2009 and considered to be applied in the country, VACPA has implemented a project

“Sample Audit Program” funded by the World Bank The Sample Audit Program (“SAP”) is designed to guide the nature, timing, and extent of essential audit procedures, ranging from planning, executing to finalization, to auditing the financial statements of manufacturing or trading companies As said by Mr Nguyen Thanh Lam, Director of Hanoi office of DTL Auditing Company, the Sample Audit Program provides auditing enterprises with a coherent process from start to finish Hopefully, the quality of auditing will be improved in the coming audit season 2010 – 2011 with the new regulations

2 Scandals

Besides all good points are mentioned about, the auditing in Vietnam can not avoid some troubles for recent years

2.1 Bach Tuyet Cotton Corporation’s scandal

In 2008, Bach Tuyet Cotton Coporation (Cobovina Bach Tuyet) shocked all investor by being revealed that the firm had said to be profitable while it made loss In

2004, the financial statements after auditing showed that BBC lost 2,121 billion VND However, in 2005, a company named A&C was invited to audit the financial statement

of BBC, which released that the business made profit of 982 million VND Although the auditor from A&C had opinions excluding some terms like the lack of reserve for inventory, use of reserve salary to pay insurance and payment for advertising a new product not included in financial statement

In 2006 and 2007, another company took part in auditing the activities of BBC- AISC In 2007, BBC required to re-check some items in financial statement for year ended 2006, therefore, the earnings after tax of Cobovina was negative 8448 billion VND The edited data was showed on the beginning of the financial statement for year ended 2007 After that, BBC started to adjust some transactions to match the earning from the previous years As a result, in 2007, BBT had a loss of 6809 billion VND and in the first 6 month of 2008, the firm had a loss of 4537 billion VND and stopped operating This scandal was revealed in 2008 and the State Securities Commission of Vietnam (SSC) fined BBT 90 million VND and reprimanded A&C and AISC The punishment SSC gave to the two auditing companies was considered to be unfair and made many investors disappointed However, according to some experts, objectively, the deep reason of this case was that BBT had provided unfaithful information leading to the mistakes in the financial statement In addition, SSC was responsible for disclosing the information without re-checking to affect benefits of the investors

2.2 AACC’s illegal consultancy

According to the investment license that the management board of industrial parks

in Dong Nai province issues, Grobest is immune from corporate income tax for four years since its business is profitable and it is subject to 50 percent of tax reduction for the next four years However, in order to receive such treatment, the corporate must ensure the export of aquatic products and seafood accounted for more than 50 percent in the first year and go up to 60 percent, and then reach three – quarter of the total revenue

In fact, in 2004, the firm’s export only made up approximately 5 percent, 30 percent in

2005, and nearly 42 percent of its total revenue in 2006 Because the corporate did not meet the commitment, it should not been entitled to treatment Confronting such problems, Grobest invited AACC to give them tax consultancy services about petition for Ministry of Finance’s or General Department of Taxation’s ratification that allowed Grobest to be tax-exempt for four years of its profits and be cut 50 percent corporate income tax for the following seven years In exchange for this service, Grobest had to pay a fee of $155,000 USD and 10 percent of the amount of tax saved if its business had profits from 2006 to 2011 In 2007, when Tax Department of Dong Nai province carried

out an investigation about tax-exemption and reduction, the truth of the scandal was revealed As a result, Grobest must pay a tax arrears of more than 36 billion VND and a lot of tax staffs were prosecuted

Apart from Grobest, AACC also gave tax consultancy services for many other businesses with foreign investment in Dong Nai and some other surrounding provinces such as Taya (Vietnam) electric wire and cable Joint Stock Company, Asia Nutrition Technologies Vietnam, Tung Kuang Industrial joint stock company and Southern Steel Sheet Company

2.3 Mistake of auditing chartered-capital in 2009

The auditing and consulting Sai Minh was reprimanded because of the mistake it made about the chartered capital of 28.8 billion VND of the Toan Cau insurance joint-stock company in February 28, 2008

The Ministry of Finance had shutdown this auditing firm According to the decree numbered 17329/BTC-CĐKT in December 10, 2009, Mr Tran Phuoc (Auditor card: 1049/KTV) who signed in the auditing report and Mr Nguyen Phu Hien (Auditor card: 0534/KTV) who signed in the capital auditing report of Toan Cau insurance joint-stock company in March 31, 2008 – the director were suspended for 1 year Meanwhile, Sai Minh Company was required to carefully check the auditing process in order to avoid crucial mistakes and insure the quality of its service

2.4 Inconsistency in accounting treatment of some listed companies and vague information disclosure

Along with the overall decline of the stock market in the end of 2008, pressure of the losses due to reserve of declined stock on the listed firms leads to the inconsistency

in accounting treatments among them and among auditing enterprises Up to 20 April

2009, there were 357 listed businesses on both Hanoi Stock Exchange and Hochiminh Stock Exchange At least 194 of them revealed disparities in business results before and after being audited

The most noticeable case was the differences in business results of one business of Kinh Do Group - Kinh Do Corporation (KDC) With the difference in after-tax operating income of about 202.987 billion VND (operating income declined from a profit of 142.376 billion VND to a loss of 60.602 billion VND), KDC were ranked as the most noteworthy case A subsidiary of Kinh Do Group also had a large gap between operating income before and after being audited – that is North Kinh Do Joint Stock Company (NKD), with operating income dropping from 39 billion VND to nearly 1 billion VND Sacombank, one of the most prestigious firms in Vietnam also had a gap

in pre-tax profit of 133 billion VND before and after the audit as well

In the case of Nam Vang Corporation (NVC), the rate of the difference reached to 8,500 percent, from a profit of 0.529 billion VND to a loss of 44,423 billion VND Another one was Minh Phu Seafood Corporation (MPC), which had difference rate of 1,043.94% According to the statistics on the website “stox.vn”, there were 47 businesses with the difference rate of more than 50% Most recently, after auditing Vietnam Construction and Import-Export Joint Stock Corporation (Vinaconex), the

Corporation’s after-tax profit of the year 2009 fell 97.84% compared with that before the audit

There were a number of reasons that the businesses could rely on to explain for the investors about the differences, such as the way revenues and costs are recorded in real estate businesses or the way financial investments are set aside in financial businesses One more cause could be the revaluation of the exchange difference among foreign loans

A financial expert, Mr Dinh The Hien stated that the businesses had inconsistent financial information and large differences without any reasonable explanation could not be accepted It only created opportunities for those who grasped the information, often the insiders, to gain high profits; outside investors suffered a loss For that reason, the State Securities Commission of Vietnam should introduce sanctions in order to punish the enterprises announcing inconsistent information to manipulate the market

Part C: Conclusion and recommendation

1 Conclusion

This research is carried out in the purpose of providing an overview of the auditing profession and its important roles in recent years in Vietnam In 15-years development, although auditing in Vietnam has faced with many challenges, it has obtained many significant achievements One of the outstanding successes of audit is the establishment

of VACPA-the Vietnam Association of Certified Public Accountants Thanks to the foundation of this association, not only auditing but also accounting quality are being managed efficiently and systematically In addition, promulgation of ethical standards and transformation of management model and ownership of auditing enterprise are also considered encouraging results Furthermore, Vietnamese auditing companies own some competitive advantages relative to foreign ones such as low fee and expertise of domestic market

Some weaknesses of independent audit in Vietnam include low reputation and lack

of quality and professionalism These disadvantages are being improved by upgrading services, technique, and special human resource training As a relatively underdeveloped auditing system, scandals relating to information disclosure or illegal consultancy are unavoidable In order to partly solve these problems, we need to continue to improve the system of auditing law and enhancing the role and activities of the professional associations to support state agencies to control independent audit practice Due to the lack of professionalism in financial analysis by Vietnamese investors, auditing has become one of the most reliable resources for public and investing community The role of auditing is gradually gaining appreciation by the public, investors, and enterprises That is the optimistic signal, promising a significant development of Vietnamese independent audit

2 Recommendation

After being a member of the World Trade Organization (WTO), almost all industries in Vietnam in general, and the field of auditing in particular, have had a great

number of opportunities as well as challenges Chances to learn and to enhance Vietnam’s audit in the global market are always accompanied by fierce competition of foreign auditing firms The report gives some recommendations that may help the auditing field of Vietnam will be stronger and synchronized with international standards Firstly, the system of law should be improved In the field of external audit, the Government has formed a relatively adequate and comprehensive system of law bringing into play its effects in directing and operating audit activities for nearly 20 years Nevertheless, the system is starting to be unsuitable up to now It should be

amended by promulgating the Law on external audit and the guidelines, updating and

promulgating Auditing standards in accordance with international ones, and regulating

on administrative violations in the independent auditing field

Secondly, enhancing the role of professional associations can support government agencies to intensify control over the practice of external audit An auditor must be a member of an auditing association that provides training, updated information frequently and continuously for them The associations not only accommodate their members with professional knowledge but also manage their quality and professional ethics Despite many recent reformations, Vietnam’s administrative structure is still inefficient compared to the organizing and operating structures of the associations in the market economy Hence, enhancing the associations’ operating roles is an efficient solution that may help Vietnam’s audit stronger in the present and in the future

Part D: References

“Chuyển đổi mô hình quản lý và chuyển đổi sở hữu công ty kiểm toán nhằm nâng cao năng lực hoạt động và cơ hội phát triển” Available at URL:

http://www.kiemtoan.com.vn/modules.php?name=News&op=viewst&sid=900 (Accessed May 16, 2010)

“Các công ty kiểm toán độc lập: "Sóng ngầm" đe dọa chất lượng” Available at URL:

chat-luong.chn (Accessed May 16, 2010)

http://cafef.vn/2010041805295147CA36/cac-cong-ty-kiem-toan-doc-lap-song-ngam-de-doa-“10 sự kiện kế toán kiểm toán nổi bật năm 2007” Available at URL:

http://www.congnghemoi.net/TaichinhKetoan/ChitietKetoan/tabid/1621/mid/4418/ArticleID/10 6262/tid/1588/dnnprintmode/true/language/vi-

VN/Default.aspx?SkinSrc=[G]Skins/_default/No+Skin&ContainerSrc=[G]Containers/_default/ No+Container (Accessed May 16, 2010)

“10 Sự kiện kế toán nổi bật năm 2005” Available at URL:

http://www.kiemtoan.com.vn/modules.php?name=News&op=viewst&sid=23 (Accessed May 16, 2010)

“10 Sự kiện kiểm toán, kế toán và thuế nổi bật năm 2008” Available at URL:

http://kiemtoan.com.vn/modules.php?name=News&op=viewst&sid=1910 (Accessed May 16, 2010)

“10 sự kiện nổi bật trong lĩnh vực kế toán, kiểm toán và thuế năm 2009” Available at URL:

http://kketoan.duytan.edu.vn/uploads/Files/63399277549353903610%20s%E1%BB%B 1%20ki%E1%BB%87n%20n%E1%BB%95i%20b%E1%BA%ADt%20trong%20l%C4% A9nh%20v%E1%BB%B1c%20k%E1%BA%BF%20to%C3%A1n-

c%C3%B4%20T%E1%BA%A5m.doc (Accessed May 16, 2010)

in making decision or not Our research includes three main parts: first, study on framework of Vietnam management accounting under the laws and regulation; second, the comparison between managerial accounting system in Vietnam and in United States and last but not least, and the application in Nam Dinh Textile Company Recommendations for the company and some suggestions for further research are given at the end of report

1 Introduction

Accounting can be divided into two fields – financial accounting and management accounting Financial accounting is used much more popularly than managerial one because it focuses on reporting to external parties such as investors, government agencies, banks and suppliers Meanwhile, management accounting focuses on information for internal decision makers of a business These two accounting fields contribute considerably to the success of the enterprises However, up to now, management accounting in Vietnam has not been gained proper attention from the enterprise side, or if it has, most enterprises do not know how to operate a complete and efficient management accounting system From this fact, finding the reason why managerial accounting has still not developed in Vietnam is our group’s main concern

To achieve this goal, Nam Dinh Textile Company – a manufacturing company was chosen for case study so that we can base on provided information from the company’s accounting department to explore how management accounting system was carried out and whether it brought a lot of benefits for the managers’ decision, in specific, and for the whole company, in general From that, it is easy for us to know the main reasons for the hesitance in apply managerial accounting system in the company

In this report, we mentioned about some regulations guiding to apply this system, some limitations in Vietnam’s managerial accounting system compared to the standards

in this field of developed countries and the important part about the application in Nam Dinh Textile Company

2 Literature review

“Management accounting is the process of preparing management reports that provide accurate and timely key financial and statistical information required by managers to make day-to-day and short-term decisions These reports typically show the amount of available cash , sales revenue generated, amount of orders in hand, state

of accounts payable and accounts receivable , outstanding debts , raw material and in-process inventory , and may also include trend charts , variance analysis , and other statistics ”

( http://www.businessdictionary.com/ )

As can be seen from this definition, unlike financial accounting which producesannual reports mainly for external stakeholders such as creditors, investors, and lenders,

management accounting refers to different stages such as:

• cost analysis: understanding about the material and labor costs(both direct and

indirect, both fixed and variable), as well as cost of goods sold

• cost-volume-profit analysis: analyzing the relationship between cost, volume,

profit to determine appropriate production index;

• break-even point analysis: finding out the point which maximize the profit given

the resources;

• pricing analysis: determining sales price for products;

• budgetting: building up budget plans for production and sales;

Besides, management accounting also includes other fields such as research on inventory, fixed asset and salary methods, etc in the corporation

Management accounting plays a very imprtant role in managerial system The provision of accurate, relevant, reliable and timely accounting information will aid management in taking managerial and economic decision for the efficient management

of the organisation and the attainment of the overall organisational goals and objectives Management accounting must be done by each corporation under control and instructions of goverments In Vietnam, the definition, the applied subjects, aims as well

as framework of managment accounting is regulated in the circular number 53/2006, issued by the ministry of Finance

resources to have more understanding of management accounting in general and its practices in Vietnam particularly

Second, we chose a public company, stating Nam Dinh textile company (NATEXCO) as the case study so that our group could examine the application of management accounting to this business We designed an interview questionaire and arranged an appoinment with Ms Hoai, chief accountant of NATEXCO on May 12th

2010 In this interview, we asked questions about the company history and its products, accounting department and especially different elements of management accounting such as: costs, salary, inventory, fixed assets, pricing, etc Moreover, we asked about her assessment on management accounting and her giving solutions to these problems We also requested Ms Hoai to provide us with some accounting materials of NATEXCO in the past through our email (attached in the Appendix) These data helps us have a truly look in NATEXCO management accounting so as to evaluate the level of application of

it in NATEXCO

4 Management accounting frame work practices in Vietnam

4.1 Summary of Vietnamese accounting law documents:

Unlike financial accounting, information provided by management accounting is used inside the companies and affects decision making However, the concept of management accounting is quite new in Vietnam It is only used outspread in recent years and official documents of government about this field are also limited, which is proved by the existence of only two legal documents: Vietnamese accounting law in general and Circular No 53/2006/TT-BTC which guides implementation of management accounting in enterprises

4.1.1 Vietnamese accounting law:

Accounting Law was issued in June 17, 2003 to uniform accounting practices in Vietnam Its aim is to meet the requirements of State agencies, enterprises, organizations and individuals for supplying relevant, timely and transparent information

in management and administration activities

As indicated in the law, the subjects of application include enterprises funded and not funded with the state budget, individuals and cooperation, from all economic sectors These could be Vietnamese enterprises or representatives of foreign organizations on Vietnam

The practices of accounting include collecting and processing accounting, keeping track of financial revenues and expenditures, and supplying information for internal and external uses to meet the requirements of explicit, understandable and accurate data Besides, information must ensure the continuity of accounting periods as well as be arranged in a comparable and systematic manner

Collection or spending, administrative or non-administrative activities of both state and non state funded enterprises are the main objects of accounting Items of business activities are assets, liability, capital, revenues and expenditure, tax, etc…

The fields of accounting comprise of financial accounting, management accounting, general accounting and detailed accounting The Ministry of Finance is responsible for guiding the application of accounting practices suitable to each field The law also indicates how monetary units are used in calculations for both local and foreign enterprises The normal accounting period might be an annual, quarter or monthly accounting period

The content of accounting practices is the most important part of the Law Regulations are set about the practice of Accounting vouchers, book-keeping accountants and accounting books, financial statements, accounting inspections, asset inventory, preservation and archival of accounting records The case of division, separation, consolidation, merge, ownership transformation, dissolution or bankruptcy

of accounting units are also taken into the consideration

Regarding the operation of accounting systems, each organization must organize their accounting staff to meet the requirements of law provisions The law ruled out criteria, rights and duties of accountants and chief accountants

The law of accounting came into effect from the first of January 2004, and ceased the effectiveness of the 1998 Accounting and Statistics Ordinance

4.1.2 Circular No 53/2006/TT-BTC:

After Law on Accounting as well as other instructive documents has come into existence, on June 12th 2006, the Ministry of Finance has promulgated the Circular No.53/2006/TT-BTC in order to assist the application of management accounting for manufacturing and trading enterprises

The subjects of applications are enterprises in production, trading and service sectors Appropriate contents in the Circular can be used by financial and banking enterprises like insurance company, stock and investment companies, credit fund as well as other financial organizations

According to the circular, the process of management accounting includes the collecting, processing, analyzing and supplying economic and financial information in response to effective management requirements to give the right financial decision within accounting units

To be different from financial accounting, management accounting is to provide information internally for managers about production and operating activities For any aspect of management accounting, the cost of any unit, work and product is seriously taken into consideration This is quite important to review the implementation of revenue, cost and profit plans to manage assets, materials, capital, debts as well as to select information for long term and short term decision Based on the implementation

of past decision, corrective actions should be taken to make budget estimation production and other activities

The main contents of the management accounting include: Products’ cost and unit price management accounting; Sales and sales results management accounting; Cost-

volume-profit analysis; Appropriate information Selection for decision making; Production and sales budget; Management accounting of some other items namely: Fixed asset management accounting; Inventories management accounting; Labor and salary management accounting and Debts management accounting

4.2 Comparisons between Vietnam and US management accounting:

4.2.1 Similarities:

As mentioned above, only two legal documents about management accounting is not enough and will create difficulties for companies to apply because they do not know which method is suitable, how to deal with problems met when using and so on However, these documents still open directions for internal accounting system because they provide basic background information Therefore, these two materials and the book

“Cost Accounting: A managerial emphasis” (Horgen C T, Foster G & Datar S, 13th ed Prentice Hall, 2008),which is considered as a source of documents about US management accounting, are quite similar in term of definition, subjects, units, rules, responsibilities, main contents of management accounting, etc as mentioned in the summary of Circular No 53

For example: in cost accounting, the most important part in management accounting, there are the same criteria to classify costs into categories like variable, fixed and mixed costs or direct, indirect, controlled and uncontrolled costs Moreover, job costing and process costing methods in these sources are presented similarly

4.2.2 Differences:

However, Vietnam’s management accounting is at the early stage of development comparing with US ones, so information in official documents is still more theoretic, general, stops at basic points and does not give out needed detail to help companies implement effectively This will lead to differences in contents of management accounting between two

Firstly, in the Circular No 53, a lot of theories, mostly definitions, are mentioned and many methods are listed out However, there is no information about how to apply methods in real condition of companies, advantages and disadvantages of these to help companies choose the ones that are suitable for them In addition, the terms are used without further explanations and examples to make them more understandable; for instance: in section (1.2.2) about cost management, there are two cost accumulation methods namely: direct method and allocation method It seems to be vague when mentioning that direct method is used in case costs related to one cost object and the other is to more than one cost object without citing what is cost object to make it clearer and more easily to apply although it is a key word

Moreover, it is the unequal weight because job costing method is described more detailed than the others which are referred to the names without further explanations about what they are and how to use them; however, it is almost theoretic because of no example beside complicated guide by words Among these other methods, target

costing, coefficient costing and cost exclusion basing on secondary products costing methods that are unpopular are mentioned while a much more accurate method, activities-based costing, are not In addition, nothing about advantages and disadvantages of all methods as well as steps and proper conditions to apply exists in this circular Taking job costing and process costing as examples, job costing is used for unique products and for custom orders when each job, product, or batch of products cost separately while process costing is done when production involved continuous process of similar items and cost assigned according to set periods of time, not according to specific jobs However, if company’s condition does not belong to these above like: products or services differ greatly in volume and manufacturing activities and/or overhead costs constitute a significant portion of total costs, activities-based costing method should be considered because it provides an accurate but high cost measurement

Furthermore, cost-volume-profit analysis which requires calculating contribution margin, break-even point, cost structure, operating leverage and so on is a crucial in management accounting, so formula, format and application should be added to make a standard It is also the same cursory situations for sales and sales result management, information selection for decision making, budget setting and costing for fixed assets, inventory, labor and salary, debts due to lack of detailed explanations and guides

After all, one area that is very necessary but received little concern or even ignored

in management accounting in Vietnam is performance measurement because its importance may be assessed inappropriately or offset by its costs However, this state must be reconsidered due to the fact that performance measurements will point out the effectiveness of the business in financial and non-financial results in order to have prompt adjustments They are balanced scorecard and accounting-based ratios namely: return on investments, residual income, economic value added, return on sales and so

on If it is not used, companies will not know how well or bad they did and something not good might happen

It is known that to have an effective management accounting in this newly integrated period of Vietnam it will take a long time to help Vietnam government together with companies approach gradually and develop to improve entire system

5 Case study: Application of management accounting in Nam Dinh Textile one member of state responsibility limited company (NATEXCO)

5.1 Company background:

HISTORY

Nam Dinh Textile company (NATEXCO), founded in 1920, is considered one of the oldest companies in Vietnam The head office is located at 43 To Hieu, Ngo Quyen, Nam Dinh city

The company came into being by French when they invaded Vietnam in order to exploit the country’s resources From Vietnam’s liberation in 1945 up to now, it has been the member of The Vietnam National Textile and Garment Group In the past, with the role of the flagship of textile and garment industry in Vietnam, “Nam Dinh textile”

used to be a famous brand within the country The company contributed a lot to development and income of the whole country in the very early time after independence However, when Vietnam economy stepped into the new stage of innovation and intergration, due to outdated machines and management system, the company was unable to catch up with other foreign competitors It made NATEXCO face up with huge bad debts that the company could not pay back to the debtors

Aiming at saving the company out of its recession, in 2005, Vietnamese government had an effort on writing off a bad debt of NATEXCO, equalling 222 billion VND (Duc T., 2005) At the same time, the government made suitable adjustments to operation and management of the company In July 2005, Nam Dinh textile company was changed

into Nam Dinh Textile one member of state responsibility limited company, with 133

billion VND of charter capital according to QĐ 185 signed by the prime minister Nguyen Tan Dung (Linh S., 2005) The director is Mr Dao Quang Hiep Accompanied with this change, the company expanded its operation to new fields beside textile industry At the end of 2007, the Hanoi Securities Trading Center undertook auction sale of 2,930,000 shares (par value at 10000 VND/ share) (Kiều M.,2007)

Photo 1: Nam Dinh Textile Company in the early 1920s (yahoo.com)

Since the establishment, NATEXCO has been specializing in producing fibre, cloth, garment products and other services The table below lists NATEXCO main garment products in term of output and characteristics:

Products Output (per year) Characteristics

Fibre 100 tons Pe/ cotton or cotton

Pe/Co, Cotton, Petex 2,000,000 meters Include: Kaki, Garbadin, Caro, etc

Others 800,000 products Include: trousers, jackets, chemises, etc

(source: vnnet.vn)

What is more, since the company’s reformation in 2005, NATEXCO has been investing in some other industries, such as: hospitality (restaurants, hospitals, etc.), transporatation (accomodation cars, store services, etc.), real estate and construction

5.2 Mangement accounting in NATEXCO

The cost object of the factory is a finished product The method of calculating cost

of production which company is applying is according to types of products and tasks They gather and allocate direct material costs, direct labor costs and overhead costs for each seperate task, each particular product or a group of products Moreover, the factory estimates overhead costs of each task and each product at the beginning of the period; then at the end of the period, they adjust the difference between actual overhead costs and estimated ones Doing this way can help NATEXCO minimize the differences between actual overhead costs and estimated values Besides, Nam Dinh textile caculates the costs of goods sold in monthly period Monthly is an appropriate time because the company’s production takes place in a small scale

RELATIONSHIP AMONG COST, VOLUME AND PROFIT

Studying on the relationship among cost, volume and profit relates to three very important factors: sale price, quantity and cost (both fixed and variable) Moreover, understanding the relationship among these involve in analyzing the break-even point (in term of quantity, sales, time ), which is very important for manager to make right decisions about future production and sale process

However, in Nam Dinh Textile company, these following studies are still not available Accounting departmant has not done research on break-even point as well as having a deep understand about these three factors yet The reason, stated by the chief accountant, is mainly because of lack of the cost for these activities Besides, human resouces of these practices are very limited in term of skills and time to do such practices Therefore, accounting department in NATEXCO assigns the price of each product not basing on break-even point analysis but basing on determining the price that can make up for the costs and get the expected profit

It is said that budgets are an integral part of management control systems because of some benefits it brings to the firm It helps to build up association and promote communication among subunits within the company Besides, it is also one of the

effective tools to evaluate employees’ performance by comparing the actual quantity with the planned one One more advantage is motivating managers and other employees It can be explained when the executives set achievable goals for their subordinates, they will work harder to achieve it

However, there are still some challenges existing in administering budgets, which makes many medium and small – size companies in Vietnam hesitate to use it Nam Dinh Textile Company is among them The chief accountant of this company explained that budgeting is a time – consuming process that involves all levels of management Moreover, as can be easily understand that the company needs to adjust plans in accordance with conditions changes Nowadays, everything is changing so fast and unexpected situations can happen anytime These are the reasons the top management of Nam Dinh Textile Company decided not to use it until now

MANAGEMENT ACCOUNTING FOR OTHER ITEMS

Management accounting also concerns some important items such as: fixed assets, inventory, salary and debts It is obvious that the main objective of management accounting is to provide meaningful information so that the managers can base on this information to make decisions and fulfill an organization’s goals

FIXED ASSETS

In term of fixed assets, management accountant needs to show the effectiveness of using and managing fixed assets of each unit and the whole company as well as the demand for using these fixed assets This will help managers to define methods to explore these fixed assets in an effective way and consider investing in new fixed assets

As provided, the main fixed assets of Nam Dinh Textile are plant, machines and means

of transportation like truck Actually, workers who directly operate machines and truck understand more clearly about the effectiveness of these fixed assets than management accountant does However, in this company, each unit works separately and association among departments is limited As mentioned above, association is one of the benefits when applying management accounting It is the reason why management accountant does not have enough and quality information related to using fixed assets to provide proper advice for manager

INVENTORY

Secondly, inventory is an important item for the company, especially manufacturing company like Nam Dinh Textile Company One of the objectives of managing inventory is to establish list of materials and more importantly, to organize management accounting in term of the quantity and value of beginning and ending inventory, cost of goods sold as well as purchase and sales units To do that, the company needs to determine the accounting method to calculating inventory As chief accountant’s answer, this company applies weighted average method It is learned that LIFO results

in the lowest income, FIFO the highest and weighted average an amount in between In fact, the provided information about inventory has helped managers a lot in making decision about which inventory items the company should purchase more and which buy less as well as the effect of price changes on sales revenue and cost of goods sold

As stated in point c, articles 6.2, Circular 53 of Ministry of Finance to guide about management accounting, enterprises establishes standard costs of raw materials, materials for each product and set up the reserve level for each list of inventory; however the company does not budget for any items including inventory

SALARY

Salary is also one important concern of enterprise In fact, payroll scale of each industry has stated in Decree 76/2009 applied from November 1st, 2009 Textile industry is not an exception Payroll scale of this industry includes six levels and is divided into three groups depending on the hardness level and the complexity of the job However, as Ms Hoai said that the company does not follow this regulation about payroll scale She said the company used these scales to calculate insurance, social assistance Meanwhile, they calculated salary based on each product and job the workers had completed To evaluate the performance and contribution level of each employee to pay salary, accountant looks at timekeeping table Salary is sensitive issue,

so it is hard to ask about the specific amount salary this company is paying for their employees However, Ms Hoai considered that the company has paid higher amount than the level the government regulated

LIABILITIES

Lastly, about liabilities, this company calculated bad debts according to debt time of each debtor (typical a year) Actually, accountant has a liability ledger to record the detail information such as debt holders’ name, the amount, payment date and the quality

of debts This information provided by accountant helps managers to consider carefully about liability policy: tighten of flexible for each kind of customers depends on their reputation, which can be seen from liability ledger

PERFORMANCE EVALUATION

Management accounting in Nam Dinh Textile has not been paid much attention and has still been disregarded As can be seen in NATEXCO, budgetting – a very important stage in management accounting – is not yet undertaken Moreover, the company does not analyze the relationship among cost, quantity and profit as well as not figuring out break-even point The lack of these very important steps in management accounting is partially able to explain the inefficiency of NATEXCO’s management accouting as the chief accountant’s comment Therefore, the managers in NATEXCO can not base on information which is brought to by management accouting to make right decisions to the company According to the chief accountant of NATEXCO, it is necessary for the company to assess the performance of management accounting carefully and up to date new regulations to complete an effective decision making system