On the basis of the reorganization of universities in Thai Nguyen
province, on April 4, 1994, Thai Nguyen University (transaction name in
English: Thai Nguyen University, abbreviated as TNU) was established
under the Decree. No. 31 / CP of the government. As one of 5 universities
in Vietnam following the 2-level university model, Thai Nguyen
University is assigned to be the center of human resource training for the
provinces, training multi-disciplinary, multi-field. Scientific research and
technology transfer tasks in order to contribute to the socio-economic
development of the Northern midlands and mountainous regions.
Currently, Thai Nguyen University has a total of 29 member units with 11
training units, 15 research units, and 03 service uni
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er internal
control and the effectiveness of financial management of Thai Nguyen
University towards financial autonomy.
Scope of the research: The thesis focuses on researching the effects
of factors of internal control on financial management effectiveness, a
specific case study of Thai Nguyen University. Analytical data is mainly
obtained between 2015 and 2017.
4. New contributions of the thesis
The expected new contributions of the thesis:
- Theoretically:
+ Generalizing the basic theoretical issues about internal control and
financial management in universities in general and regional universities in
particular.
+ Analysis of internal control of the regional university's financial
management and the impact of policies and legal institutions on the
operation of the internal control system and the effectiveness of financial
management of regional universities in the context towards ensuring
financial autonomy.
+ Indicate the effect of internal control on financial management
effectiveness at regional universities and evaluate that relationship
4
- In practical terms:
+ Study and clarify the relationship and influence of factors under
internal control on the effectiveness of financial management at TNU.
+ From the research results, it shows the internal control factors that
affect the effectiveness of TNU's financial management in the context of
aiming to ensure financial autonomy, making recommendations for
necessary adjustments and remedies. for internal control, improve the
effectiveness of financial management in order to maximize the TNU's
autonomy within the legal framework; from there, it is possible to adjust
and draw common experiences for regional universities in Vietnam.
5. Thesis structure
In addition to the Introduction and Conclusion, the thesis includes 5
chapters:
Chapter 1: Research overview
Chapter 2: Theory of internal control and university financial
management in terms of financial autonomy
Chapter 3: Research model and research method
Chapter 4: Research background and research results on the effects
of internal control on financial management in Thai Nguyen University
Chapter 5: Analyzing research results and proposing solutions to
enhance internal control to improve financial management effectiveness in
Thai Nguyen University
5
CHAPTER 1. OVERVIEW OF RESEARCH
1.1. Study general issues of Internal Control
Research on Internal Control by Charles A. Saia (1992) identifies the
elements that make up the internal control system including: control
environment, risk assessment, control activities, information and
communication, and monitoring.
Many studies on internal control by researchers mention the concept
of internal control, types of control in relation to internal audit or financial
audit. In particular, the Modern Internal Audit inherits Brink's point of
view, author Robert R. Moeller (2009, when developing more the COSO
theory for the purpose of internal audit, has added a number of items. the
objectives of internal control should be achieved.
In Vietnam, studies on the concept of the internal control system, the
constituent elements of the internal control system, the roles and
responsibilities of the objects related to the internal control, the potential
limitations of the internal control system, the sequence of and research
method of internal control system of auditors is mainly textbooks, books,
magazines, articles.
1.2. Studies of internal control in universities
These studies focus on the internal control framework of universities
such as Weixing Wang (2010), M. Popescu and A. Dacălu (2012), He Fan
et al. (2013). ... asserting control is a tool of management.
In Vietnam, in the current study on Internal Control System in public
universities in Vietnam (2012), the authors Dinh The Hung, Nguyen Thi
Hong Thuy, Han Thi Lan Thu identified internal control. The set of public
universities in Vietnam is composed of the following factors: Control
Environment, Risk Assessment, Accounting System, Accounting
Information System, Control and Supervision Procedures.
1.3. Studies of financial management and financial autonomy in
universities
6
Studying in this respect, the authors have mentioned many different
issues such as comparing the efficiency of public and private educational
financial management (Estelle James et al., 1996); the diversification of
financial resources of universities (Estermann, 2011); recognizing the
problem of financial autonomy of universities is an inevitable problem
(Michael Mitsopoulos and Theodore Pelagidis, 2008).
The researches in Vietnam on the field of financial management in
general in universities still mainly focus on solving management issues,
which are topical. Research results do not aim to rule, so it can only solve
specific management problems of a specific object, in a certain time
period.
Financial management of public universities in Vietnam, the author
Vu Thi Thanh Thuy (2012) has determined the scale of financial autonomy
of universities by the ratio of non-state revenues / total revenues of schools
and the ability to autonomy and decide on categories and rates of
expenditure.
1.4. Studies on the relationship between internal control and financial
management in universities
In these studies, the authors confirm that there is a positive influence
relationship between internal control and financial management in
universities.
In summary, previous studies have addressed the following
problems:
1. Determine the goals and factors of the university's internal control
systems.
2. Evaluate the level of awareness and implementation of internal
control by senior leaders as well as officers and employees
3. Elements of university financial management
4. Determine the scale of financial autonomy and the factors
affecting financial autonomy of universities
7
5. Determine the relationship between Internal Audit and financial
management in universities, but the resolution level is still not thorough.
Thus, through the document review process, according to the author's
understanding, there still exist quite a lot of gaps in the research on internal
control and financial autonomy in public universities in Vietnam in
general.
First. Studies on internal control systems and financial management
of universities in the world may not be suitable for higher education
institutions in Vietnam.
Second. There are no studies in Vietnam showing the rule of the
relationship between internal control and financial management.
Third. There are no studies to assess the impact of macro
management decisions on the establishment and operation of internal
control by State budget-using units.
Fourth. Studies with self-financed units also focus on solutions to
improve the autonomy of the units without assessing the impact of
autonomy on financial management decisions. main.
Fifth. No studies have yet studied the relationship between internal
control systems and financial autonomy in universities.
Sixth. Up to now, the research has only focused on solving problems
of internal control or financial autonomy for public universities, but there
is no research to solve problems of regional universities.
Seventh. In the context that Vietnamese universities move towards
financial autonomy, achieving financial management effectiveness is an
extremely urgent issue, but studies on financial management effectiveness
in general and management effectiveness. There are very few documents
mentioned in financial management in the university in particular.
Stemming from the above reasons, I chose to study the topic "Effects
of internal control on the effectiveness of financial management in
regional universities in Vietnam - Thai Nguyen University case study" to
8
clarify Demonstrating the influence of internal control on financial
management effectiveness in regional universities in the context of leading
to financial autonomy.
EXECUTIVE SUMMARY CHAPTER 1
9
CHAPTER 2. THEORY OF INTERNAL CONTROLS AND
UNIVERSITY FINANCIAL MANAGEMENT IN TERMS OF
FINANCIAL AUTONOMY
2.1. Overview of public university
"Public higher education institutions established by the State,
investing in building facilities and ensuring recurrent expenditure"
2.2. Managing college finance
2.2.1. Viewpoint on university financial management
It can be understood that: Management of university finance is the
impact of Managers on financial activities (revenue management,
expenditure management, asset management, financial control) in the unit
through the a financial management tool designed to achieve set targets
based on current legislation. Financial management of the university is an
ongoing process that includes: setting up planning targets, making cost
estimates; receive budget estimates and make allocations; organization
creating and using financial resources; guide, inspect and supervise the use
of financial resources by the affiliated units; implement financial
disclosure according to regulations.
2.2.2. Financial management towards financial autonomy in university
In terms of financial autonomy, universities must ensure their own
revenues; balance revenue and expenditure; ensure cost recovery and
accumulation is required; Financial management is similar to an independent
business. The new situation requires universities to make changes in financial
management towards financial sustainability in order to ensure development
goals. Contents of university financial management include: (1) Managing
the mobilization of financial resources, (2) Managing the allocation and use
of financial resources, and (3) Financial control .
2.2.2.1. Manage mobilization of financial resources
- Financial resources from the state budget
- Financial sources outside the state budget
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2.2.2.2. Managing the allocation and use of financial resources
2.2.2.3. Financial control
The financial management tools in public universities include:
* Budget estimate
* Work plan
* Internal spending rules
* Accounting, accounting, auditing
* Inspection system, internal inspection
* Organize the financial management apparatus
2.2.3. Effectivenes of financial management
In the context of financial autonomy, the financial management of a
regional university is considered effective when the objectives of: (1)
profitability is achieved; (2) Diversified revenue sources; (3) Ensuring
development goals; (4) Increase income for staff and trainers.
2.3. Internal control in university
2.3.1. Viewpoints on internal control in universities
Many internal audit frameworks have been developed, from which
there are separate definitions of the internal control and the different
systemic approaches. On the basis of the research purpose and scope of the
thesis, the author chooses to use the internal control framework according
to COSO as a orientation for the determination of the components of the
internal control system in the regional university. Accordingly, Internal
Audit includes 5 elements: Control Environment, Risk Management,
Information and Communication, Control Activities, and Monitoring.
2.3.2. Overview of internal control
11
COSO's concept of KSNB has been updated to show an extension of
its reporting objective: “Internal control is a process, influenced by
management, management and other employees. to provide reasonable
assurance regarding the achievement of the entity's performance, reporting,
and compliance objectives ”.
Many authors have specified the goals of internal control within an
organization. The author Dinh The Hung and his colleagues in a study on
the internal control system in the public universities in Vietnam have
generalized the definitions of the internal control by COSO and INTOSAI,
thereby affirming: , the internal control system is also understood in the
sense that the process governed by the entity's managers and employees,
designed to provide a reasonable assurance of achieving the objectives:
efficiency and effectiveness of the activity; The reliability of financial
statements; Compliance with laws and regulations ”. The regional
university belongs to the public tertiary education system, so the above
statement is consistent with the regional university internal control system.
2.3.3. Factors that constitute the university's internal control
According to COSO, Internal control consists of 5 components:
Control Environment, Risk Assessment, Control Activities, Information
and Communication, Supervisory Activities.
2.4. Relationship between internal control and managerial effectiveness
The studies all show that, there exists a relationship between the
internal control and the financial performance of an organization, and the
internal control has a positive effect on revenue and profit. As analyzed
earlier, the organization can achieve other development goals when the
profit goal is reached. And so, there exists a link between Internal Audit
and financial management effectiveness.
SUMMARY OF CHAPTER 2
12
CHAPTER 3. RESEARCH METHODS
3.1. Theoretical basis of the study
3.1.1. Foundation theory
*Contingency Theory
Contingency theory explains the variety of practical internal control
systems and, therefore, is completely applicable to this study. Universities
are economic organizations with specific missions and objectives that are
different from enterprises and other organizations. The existence of
internal control within the university ensures that the institution meets its
goals, and due to the specific nature of the university, the internal control
requires appropriate adjustments.
*Stakeholder Theory
In this study, the theory of stakeholders is used to explain the
management's decision-making based on consideration of the relationships
and benefits with outside and within the university.
3.1.2. Research model building
The research model is defined as follows:
Figure 3.2. Research models
Control environment
Risk assessment
Information and
communication
Control operations
Monitoring
Effectiveness of
university financial
management in the
context towards
financial autonomy
13
3.1.3. Determine the observed variables of the research model
On the basis of COSO's 17 principles, the observed variables for
Internal Control are identified by each element: Control Environment, Risk
Assessment, Information and Communication, Control Control operations
and Monitoring.
The observed variables of Financial Management Effectiveness
include: the university is likely to gain profits when the university moves
to financial autonomy; The university has the ability to diversify its
sources of income when the university is self-financed; the university has
the ability to ensure development goals when the university is self-
financed; The university has the ability to ensure increased income for staff
and lecturers when the university turns to financial autonomy
3.2. Research hypothesis
Hypothesis (H1): The Controlled Environment has a positive impact
on the effectiveness of financial management of TNU in the condition of
financial autonomy
Hypothesis (H2): There is a positive impact of risk assessment on the
effectiveness of financial management of the University of Technology in
terms of financial autonomy.
Hypothesis (H3): Information and communication have a positive
impact on the effectiveness of financial management of TNU in the
condition of financial autonomy.
Hypothesis (H4): There is a positive impact of control activities on
the effectiveness of financial management of TNU
Hypothesis (H5) There is a positive correlation between monitoring
activities and the effectiveness of financial management of the TNU
3.3. Data collection methods
14
Build scales and prepare for preliminary investigation. The
preliminary survey questionnaire was sent to some experts, then adjusted
and conducted with a small sample size to assess the reliability of the scale.
The results of the analysis of the preliminary survey data together with the
responses of the respondents is the basis of adjusting the questionnaire,
eliminating the observed variables that overlap or do not satisfy the
conditions of quantitative analysis, thereby to adapt the questionnaire
before large-scale investigation. Experts are selected based on the criteria
of position and long service.
3.4. Research data source
- Secondary data source
- Primary documents
3.5. Data analysis method
(1) Evaluate how the financial management effectiveness of the TNU
has been achieved through the assessment of the achieved financial
management objectives.
- Evaluate ability to achieve profit
- Evaluate the possibility of diversifying revenue sources
- Evaluate the ability to ensure development goals
- The ability to increase income for staff and trainers
(2) Study on the effects of Internal Audit on the effectiveness of
financial management of TNU
The author uses SPSS20 software to analyze the relationship
between internal control and the effectiveness of financial management of
Thai Nguyen University in the context towards financial autonomy. The
survey table, after being built, will conduct a pilot test with a small sample
15
and consult with experts before putting it into the official survey. Use
Cronbach's Alpha's test to evaluate the quality of the scale.
- Analysis of discovery factors EFA
- Test KMO
- Bartlett testing.
- Use the variance extracted (% cumulative variance) to evaluate the
explanatory level of the observed variables for the factors.
- Pearson correlation analysis and regression analysis was performed
by each element for the effectiveness of financial management
SUMMARY OF CHAPTER 3
16
CHAPTER 4. BACKGROUND OF THE STUDY AND
RESEARCH RESULTS ON THE EFFECT OF INTERNAL
CONTROLS ON FINANCIAL MANAGEMENT EFFICIENCY IN
THAI NGUYEN UNIVERSITY
4.1. The research background of the thesis
4.1.1. Regional universities and the characteristics of regional
universities in the Vietnamese public university system
4.1.2. Overview of Thai Nguyen University
On the basis of the reorganization of universities in Thai Nguyen
province, on April 4, 1994, Thai Nguyen University (transaction name in
English: Thai Nguyen University, abbreviated as TNU) was established
under the Decree. No. 31 / CP of the government. As one of 5 universities
in Vietnam following the 2-level university model, Thai Nguyen
University is assigned to be the center of human resource training for the
provinces, training multi-disciplinary, multi-field. Scientific research and
technology transfer tasks in order to contribute to the socio-economic
development of the Northern midlands and mountainous regions.
Currently, Thai Nguyen University has a total of 29 member units with 11
training units, 15 research units, and 03 service units.
4.2. Financial management situation of Thai Nguyen University
4.2.1. Revenue management and exploitation
Thai Nguyen University's revenue sources are derived from:
- Funded by the State Budget
- Sources of collection of fees, charges and other non-business
revenues
4.2.2. Managing the use of financial resources
4.2.2.1. Distribution of career revenues at Thai Nguyen University
17
4.2.2.2. Allocating State Budget estimates
4.2.3. Managing the appropriation and use of funds
4.2.4. Controlling financial management in Thai Nguyen University
4.3. Research results
4.3.1. Evaluate effectiveness of financial management of Thai Nguyen
University
Evaluate how effective the financial management of TNU has been
achieved by evaluating the achieved financial management goals. The
results of assessing the effectiveness of TNU's financial management:
potentially profitable but not high; revenue sources are not really
diversified and effective; the ability to increase income for staff faces
many difficulties; The ability to achieve development goals is affected by
unreasonable expenditure structure
4.3.2. Effect of internal control on financial management effectiveness of
Thai Nguyen University
4.3.2.1. Preliminary investigation
From the results of the preliminary survey and after adjusting the
questionnaire, the author conducted a formal survey. Research model after
the survey has changed, including 18 independent variables, 1 dependent
variable with 58 observations.
4.3.2.2. Official investigation
* Determination of sample size:
The author determines that the minimum sample size is 290,
satisfying the sample size condition. The results obtained 298 valid votes,
accounting for 85.14% of the total number of questionnaires, satisfying the
minimum sample size requirement for the study. After analyzing EFA we
18
have 18 independent variables with 52 measurement variables grouped into
18 factors.
* Effect of the Control Environment on Financial Management
Effectiveness
HLQLTC = 0.26GTDAODUC + 0.306LANHDAO
+ 0.131CCTOCHUC + 0.212CSNHANSU
+ 0.116TNCANHAN + 0.152CSNHANUOC
In which, the effectiveness of financial management of Thai Nguyen
University is most influenced by the leadership role and established ethical
values as well as personnel policy.
* Effect of Risk Assessment on Financial Management Effectiveness
HLQLTC = 0.502XDMUCTIEU + 0.296NDRUIRO
+ 0.168DGGIANLAN + 0.22TDDANGKE
The effectiveness of financial management of Đại học Thái Nguyên is
most influenced by the targeting and identification of risks, and it is also
important to pay attention to significant changes.
* Effect of Control Activity on Financial Management Effectiveness
HLQLTC = 0.617CLKIEMSOAT + 0.136SDCONGNGHE
+ 0.204TUANTHU
In which, the effectiveness of the financial management of Thái Nguyên
university is most affected by the selection of control activities.
* Effect of Information and Communication on Financial
Management Effectiveness
HLQLTC = 0.560TTTHICHHOP + 0.171TTNOIBO
+ 0.233TTBENNGOAI
The effectiveness of financial management of Thái Nguyên university is
most influenced by the appropriate use of information.
19
* Effect of Supervision on Financial Management Effectiveness
HLQLTC = 0.481GIAMSAT + 0.385SCHIEMKHUYET
In relation to the effectiveness of financial management of the National
University of Technology, both supervisory drug factors have a great
influence.
SUMMARY OF CHAPTER 4
20
CHAPTER 5. ANALYSIS OF RESEARCH RESULTS AND
PROPOSING SOLUTIONS TO PROMOTE INTERNAL
CONTROLS TO ENHANCE EFFICIENCY OF FINANCIAL
MANAGEMENT IN THAI NGUYEN UNIVERSITY
5.1. Analysis of research results
From the research results on the current situation and evaluation of
the effectiveness of financial management in the VNU, it is possible to
summarize the main issues as follows:
(1) While there is still support from the state budget, most of the
member higher education institutions of the Thái Nguyên university have
achieved the target of collecting enough to cover costs and have
accumulated. The ability to self-pay regularly is the premise for schools to
achieve profits in the future context. However, the level of self-assurance
of recurrent expenditure of these units is not high, due to low income while
recurrent expenditure increases.
(2) The revenue sources of the University of Natural Resources are
not diversified and have not been exploited effectively.
(3) The proportion of increasing average income of faculty staff over
the years has not been stable, showing that the ability to increase income for
faculty staff of the university faces many difficulties in the new period. This
is an inevitable result of an unreasonable revenue structure, depending too
much on enrollment ability, and other career revenue sources have not
brought high efficiency.
(4) The development goals of the university are determined
according to each historical period, however, the expenditure structure in
21
the total expenditure is not reasonable and has not met the operational and
development goals of a regional university.
5.2. Development orientation of Thai Nguyen University to 2030
5.3. Some solutions to strengthen internal control to improve financial
management effectiveness in Thai Nguyen University
5.3.1. Strengthen internal controls to improve financial management
effectiveness in Thai Nguyen University
(1) Propose perfecting the internal control environment
(2) Risk assessment proposal
(3) Suggestions for completing Information and
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