MINISTRY OFFINANCE MINISTRY OF EDUCATION AND TRAINING ACADEMY OF FINANCE ------By LAI PHUONG THAO COMPLETING THE PROCESS OF AUDITING NATIONAL TARGET PROGRAM FOR NEW RURAL DEVELOPMENT
Trang 1MINISTRY OF
FINANCE
MINISTRY OF EDUCATION AND TRAINING
ACADEMY OF FINANCE
- -By
LAI PHUONG THAO
COMPLETING THE PROCESS OF AUDITING NATIONAL TARGET PROGRAM FOR NEW RURAL
DEVELOPMENT CONDUCTED BY THE STATE AUDIT OFFICE
SUMMARY OF ECONOMICS PHILOSOPHY
DOCTORAL THESIS
HANOI - 2020
Trang 2This thesis is made at the Academy of Finance
Professional advisers: 1 Assc.Prof, Dr Le Huy Trong
2 Dr Nguy Thu Hien
Critic 1:
Critic 2:
Critic 3:
The thesis will be presented to the Thesis Committee at the Academy Council of
the dissertation, meeting at the Academy of Finance
at hour day month the year 2020
The thesis can be found at the National Library
and Library of Academy of Finance
Trang 3LIST OF RESEARCH PROJECTS HAVE BEEN PUBLISHED BY
AUTHOR RELATED TO THE THESIS
1 Lai Phuong Thao, Do Quang Giam (2019) Japanese efficiency audit: Lessonslearned for auditing national target programs for new rural development ofVietnam Journal of Audit Scientific Research, Volume 143- 9/2019, pages 83-90
2 Nguy Thu Hien, Lai Phuong Thao, Vu Thi Hai (2019) Applying the heat map
to assess potential risks in the audit national target program for new ruraldevelopment conducted by the State Audit Office Journal of Finance &Accounting Research, Volume 12 (197)/2019, pages 21-27
3 Lai Phuong Thao, Nguy Thu Hien, Vu Thi Hai, Bui Thi Mai Linh (2019).Applying the heat map: Inherent risk assessment potential in auditing Journal
of Finance & Accounting research No 01 (5)-2019, pages 19-27
4. Le Huy Trong, Lai Phuong Thao (2017) Identify potential risks in mobilizingfinancial resources for the national target programs for new rural development.Retrieved at: State Audit Office website: http://baokiemtoannhanuoc.vn/chuyen-de/nhan-dien-rui-ro-tiem-tang-trong-huy-dong-cac-nguon-luc-tai-chinh-cho-chuong-trinh-xay-dung-nong-tho-137552
Trang 51 The rationale of the research
The audit process in general and the audit process conducted by the State AuditOffice of Vietnam (SAV) in particular are always the top concern of many subjects Overthe years, many researchers have tried to analyze and evaluate different aspects of theaudit process with different auditing subjects However, so far, the process of auditingnational target programs (NTPs) by the SAV has not been consistent and studies on thistopic continue to be implemented This is because the NTP audit procedure implemented
by the SAV is difficult to monitor and measure, depending on the management'swillingness and judgment of each individual, so it is difficult to have a unified view
NTPs are public investment programs that are important to the country's economic development The National Target Program for New Rural Development (NTP-NRD) is one of two NTPs being implemented in Vietnam The program is performed inseveral phases, with the point of "starting point only but no ending point", the specificgoals of the Program in each phase will serve the country's development target Theprogram involves large amounts of capital investment from the state budget as well aspeople’s budget so it receives a large concern of the whole society and the politicalsystem Despite the fact that the NTP-NRD audit has initially provided useful information
socio-to the National Assembly, the Government, Ministries, and localities in organizing,managing, administering, implementing the Program, and auditing the NTP-NRD stillfaces many difficulties and challenges This situation requires more research on theauditing process for NTPs in general and for the NTP-NRD in particular in thedirection of improving the quality of the information provided by the SAV
With the theoretical gap in the conducted researches, based on practical
requirements of the SAV, the author conducted the research: “Completing the
process of auditing national target program for new rural development conducted
by the state audit office" in order to clarify the issues being concerned of the audit
procedure, and to propose solutions to effectively solve practical problems
2 Review of domestic and foreign studies related to the dissertation topic
2.1 Overview of domestic studies
2.1.1 Studies on the NTP-NRD
(1) Studies on management, organization, and implementation of NTP-NRD
The NTP-NRD has being implemented in 63 provinces and cities across thecountry, so there have been studies on management, organization and implementationexperience in some localities such as Pham Ha (2011) showed how to organize the
Trang 6implementation of the program in Quang Ninh province from selecting theimplementation criteria to realizing the mobilization of internal strength from thecommunity so that the province will soon reach the set target Vu Kiem (2011)pointed out the direction, management, and organization of the Steering Committee atall levels in implementing the program to help Thai Binh leverage the advantages andovercome limitations to achieve the goals of the Program in each phase Ba Thang(2011) pointed out the difficulties and challenges of Dak Lak province in theorganization and implementation of the program, the root cause of the challenges thatmake the province’s NRD progress slow in comparison with the general plan ThanhTan (2011) studied the case of Yen Bai and Vu Kiem (2011) studied in Thai Binhprovince All of these studies focus on analyzing and assessing the characteristics,organization, and management of each locality, from which to draw lessons or topropose solutions for the problems.
(2) Studies on the appropriateness of the criteria used for NTP-NRD evaluation
Recent domestic studies on the NTP-NRD have shown the importance andsignificance of the Program to the overall development of the country According tothe authors, although the NTP-NRD has achieved significant results, there are stillmany issues which needed to considered, evaluated and adjusted so that Programoutcomes can meet the expected goals of National Assembly, the Government andthe expectation from people (Do Kim Chung and Kim Thi Dung, 2012, BudgetTransparency Alliance, 2018) Although these studies do not directly involve theaudit procedure of NTP-NRD conducted by the SAV, they are great references whenthe SAV identifies potential risks in the procedure of auditing the Program
2.1.2 Studies on the audit process conducted by the SAV
The domestic research results show that the research on the content, procedures,and methods of NTP audits has received increasing attention from researchers Asidefrom studies on the state budget auditing process by the SAV (Vuong Dinh Hue,2004); procedure of auditing construction projects funded by the state budgetconducted by the SAV (Tran Thi Ngoc Han, 2012) or developing scenarios for theaudit procedure performed by the SAV in Le Anh Minh's research (2018), there arealso studies on the procedure, content, and methods of auditing NTPs Le Hung Minh
et al (2003), Nguyen Thi Kim Dung (2016) pointed out the necessity of auditingNTP-NRD, the program quality criteria, and factors affecting the quality of programauditing in which auditing procedure is one key factor But the authors have not
Trang 7clarified the specific limitation of each task in each step of the NTP-NRD auditingprocedure Vu Thi Thanh Hai (2011) argued that auditing NTPs are operational auditwhich aimed to assess the Program's economics, efficiency, and effectiveness.Nguyen Tuan Trung (2015) developed the research of Nguyen Van Ky et al (2003)and made the opinion that the auditing NTP is a combination of financial audits,performance audits, and compliance audits In previous studies, most of the studiesfocus on auditing NTPs in general, specific studies in auditing NTP-NRD are notnumerous However, some of these research results provide a new direction for thefollow-up suggestions for further steps in the implementation of the NTP-NRD auditprocedure concerning the Program's specificity.
2.2 Review of foreign research
2.2.1 Studies on NTP-NRD
Some countries around the world also have movements to build new rural areas,such as the movement to build "new villages" (Saemaul Undong) in Korea in the1960s (Tuan Anh, 2012); China, with many agricultural and rural developmentprograms, such as the "fire show", aims to equip millions of farmers with advancedscientific ideas, fostering talents and improving their quality, the "Bumper CropProgram" helps the majority of farmers apply advanced science and modernmanagement methods to develop agriculture and rural areas, the "Poor-aid program",etc (Cu Ngoc Huong, 2006); in addition, US, Japan, Thailand, and some othercountries also have programs geared towards agriculture, rural areas and farmers.Most of the studies on NTP-NRD are focusing on the Program's implications for thecountry's development
2.2.2 Studies on the audit process conducted by the State Audit Office
In the early 1960s, under the pressure of that program auditing need to helpimprove the performance in subsequent stages of the program, the State Audit Office
of Japan conducted effective audits when auditing programs and projects to assess theimplementation, utilization and direct results of programs and projects throughbenefit-cost analysis, and impact assessment on beneficiaries, correctness, andappropriateness of the program and project for socio-economic change, therebyproposing solutions for improvement (Kazuki H & Shigeru Y., 2006) In the samestudy, the authors pointed out the steps to perform the audit, the audit process ofproject programs conducted by the State Audit Office of Japan which is an effectiveaudit, so the criteria used to evaluate are criteria related to outputs and results ofprograms and projects
Trang 8Recently, global State Audit Offices face more and more challenges related tothe quality of the information provided by the State Audit Offices In addition tocompleting the system of international state audit standards, the audit process has alsobeen focused on developing IDI (2009).
IDI (2012) in the manual for the implementation of the International AuditStandard for audit activities has cited the audits of social security programs andprojects that applied operational audits with four steps in the auditing process toassess the economics, efficiency, and effectiveness of programs and projects Itemphasized, from the findings made through the audit, the State Audit Office mustassess the impact of those findings, and propose solutions to improve the followingphases of the program and projects This document also initially addresses theproblem of determining audit risk in the operational audit, as a basis for applying riskmaps to assess risks of audits
Research on the audit process of national programs, projects, centers of healthand human services of the US has conducted research and built an audit process ofsix steps: (1) Preliminary planning set for audits; (2) Preparing the investigation ofthe audit object; (3) Designing data collection surveys; (4) Collecting and analyzinginformation; (5) Preparing audit report; (6) Evaluating the results after the audit.Research has also shown that the above six audit steps are not only closelyintertwined, but also help to create useful audit evidence for drawing conclusionswhen auditing national programs and projects with audit content including financialand operational audits However, the audit process has not yet indicated thesuitability of the process with the characteristics of the object being audited.(Department of Health & Human Services, 1994)
Steve G Sutton and James C Lampe (2012) gave an overview of the auditprocess quality assessment framework The study has reviewed previous studies onthe audit process, the quality evaluation framework of the audit process But theresearch only involves the audits of financial statements, not to audits of programsand projects
Le Anh Minh (2014) outlined the audit standards for the Australian public sectoraudit process, the direction of technology affecting the audit process, and theperformance evaluation activities of the audit process performed by the AustralianGovernment, which made strategic suggestions to change the audit process of theState Audit Office of Vietnam However, the research results are based on the
Trang 9opinions of the State Auditors without the feedback on the audit process results fromthe audited subjects.
In general, in recent years, researchers have made great efforts in approachingthe audit process, the audit of programs and projects implemented by the State AuditOffices to provide solutions to complete the process, the audit activities of programsand projects under a different point of view and has achieved certain results Thereby,
it not only contributes to clarifying the role and responsibility of the State AuditOffices to the performance of programs and projects in practice but also is a valuablesource of theoretical material, as a premise for further studies
2.3 General conclusions from published studies and new points in the research of the thesis
2.3.1 Conclusions drawn from published studies
Firstly, there is no consensus on the content of the work in the process ofauditing the NTPs in general, the process of auditing the NTP-NRD in particular Thecontent of work performed in each work step of the audit process is also subjective,dependant on different perspectives
Secondly, up to now, there have been no domestic and foreign studies on theappropriateness of the contents of the work in the process of auditing the NTPs ingeneral, the NTP-NRD in particular based on assessing the satisfaction of objectsusing the information provided by auditors
In summary, in the past years, many authors have focused on the NTPs ingeneral, the NTP-NRD in particular and the audit process conducted by the SAV toshow the achieved results and the shortcomings in the organizing, managing andimplementing the Program as well as the advantages and limitations of the auditprocess and they have achieved certain results However, there is a lack of researchstudies on the auditing process on NTP-NRD conducted by SAV in specificconditions of Vietnam
2.3.2 Research gaps and new points in the research of the dissertation
- Studying the specific characteristics of the NTP-NRD and SAV, which clearlyindicates the effects of these characteristics to the process of NTP-NRD auditconducted by the SAV;
- Studying the appropriateness of the auditing process of NTP-NRD through thefeedback of the auditors participating in the audit, auditors of the advisory units forthe General State Auditor for each step of the work in the audit process Thereby, the
Trang 10dissertation focuses on studying the causes of inappropriate points in the process,creating a basis for proposing complete solutions;
- Studying the satisfaction of the beneficiaries for the process and results of anaudit of NTP-NRD conducted by SAV, thereby proposing the completion of theprocess, improving the usefulness of the audit results by the SAV
3 The research objectives of the dissertation
- To systematize, interpret, and clarify the theoretical basis of the procedure ofauditing NTP- NRD conducted by the SAV
- To analyze and assess the status of the procedure of auditing NTP- NRDconducted by the SAV
- To propose orientation and solutions to complete the procedure of auditingNTP- NRD conducted by the SAVcontributing to improve the audit quality
4 Research subject and scope of the dissertation
Research subjects
The objects of the dissertation are the theoretical and practical issues related tothe procedure of auditing NTP-NRD conducted by the SAV To carry out this study,the subjects surveyed to collect information for the topic consist of auditors andrepresentatives of the SAV advisory agencies; experts and representatives of auditedentities from ministries, central functional agencies as well as provincial, district, andcommunal authorities in Vietnam
Scope of the research:
The study was carried out for auditing NTP-NRD conducted by the SAVrecently in Vietnam The study focuses on analyzing and evaluating the procedure ofauditing NTP-NRD conducted by the SAV in localities, the study does not go intodepth analyzing the procedure of auditing NTP-NRD at the ministerial and functionalagencies level
Research limits
The dissertation only focuses on researching, analyzing, and evaluating detailedaudit procedures implemented at localities without researching the comparative auditprocedure in ministries and functional agencies conducted by the SAV for NTP-NRD
in Vietnam
5 Research method
Approach method: Participatory approach; Process approach; Approach
according to the implementation level
Research site selection method: identified suitable research sites and
subjects
Trang 11Information collection method: Used to collect secondary data and primary
data of each content related to the procedure of auditing NTP-NRD Based on thecollected data, the Ph.D candidate selected the necessary and suitable data fordeep analysis
Information summarizing and analyzing method: Secondary and primary
information collected for research is classified, processed, and synthesizedaccording to the system of research indicators serving the evaluation of theprocedure of auditing NTP-NRD conducted by SAV After obtaining information
on the current status of the procedure of auditing NTP-NRD conducted by SAV,the author applied data analysis methods such as descriptive statistical method,comparison method, scoring method, and priority ranking method
6 The scientific and practical significance of the thesis
The completion of the dissertation has scientific and practical significance asfollows:
Theoretically: The dissertation is a scientific research document for theoretical
issues on NTPs, management mechanisms, auditing activities for NTPs of state auditagencies This theory can be the premise and basis for forming the theory for thetypes of thematic audits performed by the SAV
Practically: The dissertation studies the current situation of the NTP-NRD
auditing procedure conducted by the SAV, thereby proposing several solutions andrecommendations to contribute to the completion of the auditing NTP-NRDconducted by the SAV The findings of the dissertation are the manual to the SAVs inthe implementation of the NTP audit procedure in general and the NTP-NRD inparticular, as well as revise some steps of the audit procedure
Trang 12CHAPTER I BASIC THEORIES OF PROCEDURE OF AUDITING THE NATIONAL TARGET PROGRAM CONDUCTED BY STATE AUDIT OFFICE
1.1 GENERAL THEORY OF STATE AUDIT OFFICE
1.1.1 The concept of State audit office
1.1.2 State audit concept
The State audit office is a professional organization of the state administrativeapparatus State audit activity is the process of collecting audit evidence objectively,independently, systematically to determine compliance with the law in managementand use of finance and public properties Thereby implementing accountability to thelegislature, law enforcement, people about the economics, efficiency, andeffectiveness of programs and projects funded by the State budget
1.1.2 The role of a state audit
Firstly, it contributes to improving the economics, effectiveness of themanagement, and usage of financial resources of the State
Secondly, it contributes to improving the observance and improvement of laws
on the economic and financial management of the State
Thirdly, contribute to creating transparency of economic-financial relations.Fourthly, contribute to improving the effectiveness in management and usage ofState finance
1.1.3 The function of State audit
General function: Function of verifying and expressing opinions
Specific functions: Function of assessing, confirming, concluding andrecommending of the management and usage of a nation's public finance and assets
1.1.4 Organizational model of the State audit office
(1) The organizational model of the completely independent SA office: theState Audit Office of the Federal Republic of Germany, the Court of Appeals of theRepublic of France, the SAV of Spain, Greece, Switzerland, Portugal, Indonesia, and
a few other countries
(2) The organizational model of the SA office under the executive(Government): China, Japan, Thailand, Sweden, Laos, and some other countries
Trang 13(3) The organizational model of the SA office under the legislature (parliament):USA, Russia, UK, Denmark, Australia, Netherlands, and many other countries.
(4) The organizational model of the SA office belongs to the head of State(President): South Korea, India, Bangladesh, Paraguay, and some other countriesapply
1.2 BASIC THEORY OF NATIONAL TARGET PROGRAM
1.2.1 The concept of the target program and national target program
Target program: It is understood that a public investment program includesprojects aimed at realizing one or several government objectives in a certainindustry or sector that are facing urgent issues to be addressed
National target program: A public investment program aimed at realizing thesocio-economic objectives of specific periods nationwide
1.2.2 Characteristics of target program, national target program
Characteristics of Target program: The target program usually has a narrowscope in a certain industry or territory, the influence of the program is therefore alsolimited in a certain scope, in-depth content according to the problem needs to besolved in each region or field, the program implementation time can be many years.Characteristics of National target program:
- Regarding the content: The NTP includes sustainable development programsassociated with the country's comprehensive development strategy in a specificperiod, deeply affecting people's lives
- Regarding the structure of capital sources: The capital for implementation ofNTPs is usually from many sources such as Central budget sources; Local budgetsources; Legally mobilized resources from organizations, businesses, and thecommunity; Credit funds; and integrated resources from other programs and projects,
so the management will be very complex, requiring scientific management andadministration
- Regarding the regulations on management and administration: Themanagement and administration of NTPs from the central to local levels with specificpowers and obligations of each unit
1.3 PROCESS OF AUDITING NATIONAL TARGET PROGRAMS CONDUCTED BY STATE AUDIT OFFICE
Firstly, preparing for the audit
Trang 14(1) Prepare, approve and send the survey outline; (2) Collect information ofNTPs; Review of collected information and internal control system of the auditedentity; Identify audit risks and critical contents of the audit; (5) Plan the audit.
Secondly, implementing the audit
Auditors deploy the contents established in the general audit plan in general andthe detailed audit plan in particular, through audit methods and techniques to collectaudit evidence in a sufficient way, and reliable basis for making conclusions
Thirdly, preparing and approving the audit reports
The auditors must collect all audit evidence in order to make comments andassessments on the contents of the audited NTP, from which to prepare audit recordsand audit reports
Fourth, monitoring and inspecting the implementation of audit conclusions, recommendations
Monitoring and inspecting the implementation of audit conclusions andrecommendations is a separate step of the State audit This activity demonstrates thecompetence and responsibility of the State audit in evaluating the implementation ofthe audit conclusions and recommendations made by the State audit office to theaudited entity and the settlement of issues raised in the audit reports
1.4 EXPERIENCE OF SOME COUNTRIES IN THE WORLD ON THE NATIONAL TARGET PROGRAM AND LESSONS LEARNED FOR VIETNAM
1.4.1 Experience of some countries in the world when auditing NTPs
Secondly, it is necessary to arrange a reasonable time and personnel so that theauditor can deeply assess the implementation situation, evaluate the use of program
Trang 15and project outputs, evaluate results, and evaluate them the adaptability of theprogram in the socio-economic development;
Thirdly, the State audit office needs to apply expert methods, with consulting ofexperts from specialties related to projects in the NTPs into expert contracts for high-tech work sections such as formulating evaluation criteria;
Fourthly, to make the audit process more transparent, and at the same time helpthe auditors have more reference information, the SAV should apply informationtechnology in updating electronic diaries, in reporting progress of audit inspectionteams, in requesting audit inspection teams to review the work of the team, to assignresponsibilities to each auditor when the audit content is missed;
Fifthly, it is necessary to attaching importance to organizing the evaluation anddrawing experience after each audit phase to review and to carefully evaluate thelimitations in order to draw experience before conducting the audit for the next batch.Sixthly, it is essential to surveying to collect feedback on the satisfaction of thesubjects using information from the NTP audit results to evaluate the effectiveness ofthe audits
CHAPTER II CURRENT PROCESS OF AUDITING THE NATIONAL TARGET
PROGRAM FOR NEW RURAL DEVELOPMENT CONDUCTED BY THE
STATE AUDIT OFFICE OF VIETNAM 2.1 BRIEF INTRODUCTION OF AUDITING THE NATIONAL TARGET PROGRAM FOR NEW RURAL DEVELOPMENT IN VIETNAM
2.1.1 Brief introduction of the NTP-NRD in Vietnam
2.1.1.1 The national target program for new rural development in Vietnam
The NTP-NRD in Vietnam is a program which consists of a set of relatedgovernment funding projects to target the goal of constructing Vietnam rural areaswith modern socio-economic infrastructure; rational economic structure and forms ofproduction organization, combining agriculture with the rapid development ofindustry, services and urban following the planning; stable rural society, rich innational cultural identities; improving the intellectual standard, ecological protectingthe ecological environment; strengthening the rural political system under theleadership of the Communist Party