Tài liệu Accounting behavior corruption in organization

DECLARATION OF ORIGINALITY AND WORD COUNT I hereby declare that the graduation project is based on my original work except for quotations and citations which have been duly acknowledged. I also declare that it has not been previously or concurrently submitted for any other course/degree at Help University College or other institutions. The word count is 10,324 words. ______________________ VO THI THUY CHAU October, 2011 1 ACKNOWLEDGEMENT The first thing I would say that I can not accomplish this dissertation without the enthusiastic support of my teachers, friends, and with the encouragement of my family. First at all, I want especially to thank sincerely to my supervisor Dr. Le Van Lien, International School, Vietnam National University Hanoi. He is the teacher who is not only caring me during my thesis work but also a mentor to teach me all those years in International School. I would like to express thanks to Ms. Sumathi, Help University College, who initiated and give so much instruction and support about the dissertation. Additionally, I also wish to take this opportunity to thank all others Vietnamese teachers at International School and the Malay teachers at Help University College who taught and helped me during the study process at the International School. I will never forget the teachers and friends who have worked closely with me throughout my five years of study at the University. Finally, I want to send all my academic achievements to my parents who laid the foundation for me to study at the International School and always believing, encouraging me on the path of learning. VO THI THUY CHAU 2 ACCOUNTING BEHAVIOR: CORRUPTION IN ORGANIZATION (VIET NAM) By VO THI THUY CHAU October 2011 Supervisor: Dr. Le Van Lien ABSTRACT Accounting behavior is the role important to society; it is a sensitive concept to our social. Specially, with career that closely associated with economic activities such as accounting. Given the code of ethics for professional accountant, and the factors has contributed to accounting corruption. This study aims to examine the significance of ethic issues in order to ensure good professional accountant in corporate governance and sustainable business practices. In thesis, it carried out via survey of 167 accountants which divided two groups such as accountant and student major in accounting. Both of this groups show that accountants has experience and they has broken ethic than the one has less experience. So, the corruption raises the organization with customers, suppliers, employees and other individual, and also as a result of these acts as courtesy gifts, kickbacks and discriminatory pricing. 3 TABLE OF CONTENTS DECLARATION OF ORIGINALITY AND WORD COUNT ................................................ 1 ACKNOWLEDGEMENT ............................................................................................................ 2 ABSTRACT ................................................................................................................................... 3 TABLE OF CONTENTS .............................................................................................................. 4 LIST OF FIGURES ...................................................................................................................... 6 LIST OF ABBREVIATIONS ...................................................................................................... 7 1. INTRODUCTION ................................................................................................................. 7 1.1. Research background .................................................................................................... 7 1.2. Problem statement......................................................................................................... 8 1.3. Objectives and spere of research .................................................................................... 8 1.3.1. Objectives of research ......................................................................................... 8 1.3.2 Spere of research ................................................................................................. 9 2. LITERATURE REVIEW ................................................................................................... 10 2.1. Corruption ................................................................................................................... 10 2.2. Accounting behavior and its relation to corruption .................................................... 13 2.2.1 Accounting transparency and accounting regulation .................................................. 14 4 3. 4. 2.2.2 Corporate governance and auditing for corruption ..................................................... 18 2.3. Code of ethics for professional accountant ................................................................. 20 2.4. Problem corporate value and altruism ........................................................................ 24 2.5 Money culture ............................................................................................................. 25 RESEARCH METHODOLOGY ....................................................................................... 27 3.1. Research objective ...................................................................................................... 27 3.2. Research method ......................................................................................................... 27 3.3. Sources of data and sample selection ......................................................................... 30 3.3.1 Collecting data ............................................................................................................ 30 3.4. Sample selection ......................................................................................................... 30 3.5. Hypothesis statement .................................................................................................. 31 FINDINGS AND ANALYSIS ............................................................................................. 32 4.1. Collection of questionaires ......................................................................................... 32 4.2. Description of results and result analysis ................................................................... 32 4.2.1. Result analysis H1……………………...... ……………………………..................…35 4.2.2. Result analysis H2 ...................................................................................................... 39 4.2.3. Result analysis H3 ...................................................................................................... 43 5 4.3. 5. General discussion ...................................................................................................... 44 CONCLUSION .................................................................................................................... 45 5.1. Conclusion .................................................................................................................. 45 5.2 Recommendation ........................................................................................................ 46 5.3. Limitations of study .................................................................................................... 47 5.4. Suggestion for future research .................................................................................... 48 REFERENCES ............................................................................................................................ 49 APPENDIX A: QUESTIONNAIRE .......................................................................................... 53 APPENDIX B: STATISTICAL TEST ...................................................................................... 56 6 1. INTRODUCTION 1.1.Research background Accounting behavior is important role decide as part of the value of a company. Behavior accounting was developed to make the behavioral effects transparent to potential and current stakeholders. It also depends on numbers and attempts include human factors and this is done the better understand the impact that business processes, opinion, and human variable have on the value of the overall corporation, now and future. Accounting behavior has relationship with corruption in organization because accountants has responsibility control books accounting, and assisted in financial statements and audits these statements so it is also easy corruption in order to earn profit themselves and for them, they also easy balance account books. This mainly factor, it causes corollary effect to corruption in organization. Besides, those accountants play an important role in good corporate governance and ethical sustainable business practices and it increases corporate governance and transparency as well as increase adoption of professional and ethical. Moreover, accounting is central to working of capitalism, and influence to accounting transparency, corporate governance and audited for corruption, money culture, corporate valued and altruism also contributes significantly and it is never ending corruption. The same as Francis (1990) has been explain what he note about potential impact upon society; the moral has relevant to choice accounting. 7 He explains: “Accounting effect our life and experience. It extends and relationship practice grounded in moral discernment. It is important extent and it can transform the world. Accounting can influence our experience or our life for others in way which cause different from what it can be in absence of accounting or in an alternative kind of accounting”. 1.2. Problem statement Nowadays, the problem of corruption has effected dangerous in all of daily segments because Problem of corruption is not only be internal country but also international problem other external country. Corruption is dangerous effected moral degradation and it can hamper country development problem. It is getting bigger a number of poverty. I want to know about the dangers of corruption and not just cause in a country that greatly influenced the world. And I want to address the issues related to accountant and behavior accounting and corruption, transparency, governance accounting.So, my aim want to clarify to three issues. 1.3. Objectives of research and sphere of research 1.3.1 Objective of research To research about these code of ethics for professional accountant in Vietnam To research these factors contribute to accounting corruption in Vietnam To research these problem corruption accounting 8 To recommend and gave idea to investors, and saw the important ethic in company for corruption in accounting. 1.3.2 Sphere of research Place of research: company in organization in Vietnam. Objective research: accountants and student major in accounting For research in company: public companies and private companies Time period of research: 9 2. LITERATURE REVIEW 2.1. Corruption Corruption could be seen as the collective noun that includes briber, payments, illegal, extortion and the problem relevant to it. This is first problem dealing with corruption and defines what are happening to it. The some document debate in the literature such as it provided by Nye, 1967; Heidenheimer, 1970; Scott, 1972; Thompson, 1993, 1995; Johnston, 1996; and Philp, 1997; center on the abuse of public roles and resources for private gain. Hao and Johnston ( 1995) assert that in the case of changing societies, corruption is a term that used in connection with different situations. Thompson (1993, 1995) suggests that the distinction between public and private corruption is difficult, while Johnston (1999) argues that the reasons for engaging in corrupt activities has become “so ingrained” in the system that nobody talks about them. In addition, Johnston (1999) asks whether corrupt activities can distinguished from acceptable activities. Corruption based on rules and laws because of the universal application, stability and relative precision that formal laws offer ( Nye, 1967 and Scott, 1972).However, at times, law are broken, lose their legitimacy and, as a consequence, the issue becomes whether corruption should be described in terms of its social significance, rather than its nominal meaning, together with cultural implications ( peters & Welch, 1978, Gibbons, 1989). 10 The corruption could treat the same as “abuse of public roles or resource for private benefit”. In fact, the literature show these actions alone ignores morality and it justice in a society and overlooks the political values of good representation, deliberation and accountability( Thompsin, 1993, Philp 1997; Moodie, 1980; Euben 1978 and 1978) Corruption could be treated as “the abuse of public roles or resources for private benefit” by appreciating that the terms “abuse”, “public” and “benefit” are subject to considerable dispute and interpretation (Johnston, 1999).For undemocratic countries corruption starts from the top or problem criticism (sands, 1990 and Hao & Johnston, 1995).Johnston (1999) analytical about definition corruption that it would not capture all possible grievances of corruption, it still elicit question regarding to accountability, transparency, and fairness. He concludes that ultimately, “…the most important issue may not be what the term „corruption‟ means, who gets to decide what it means, and how those decisions will be accepted” (p. 6). The United States was the first country to enact legislation specifically aimed against corruption; the Foreign Corrupt Practices Act of 1977 (FCPA). Perhaps ahead of its time when it was created, its provisions are still in force today and impose criminal penalties on American enterprises and individuals who bribe officials of foreign governments. Several federal statutes preceded the FCPA, notably the Securities Act of 1933, the Securities Exchange Act of 1934 (requiring all publicly traded companies in the U.S. to disclose any material fact necessary to make financial and management statements "not misleading"), the Mail and Wire Fraud Acts (prohibiting use of the mails or interstate or international telecommunications for the purpose of executing any scheme to defraud), 11 the Internal Revenue Code (prohibiting the deduction of illegal payments to foreign officials), and the False Statements Act (imposing criminal penalties on persons or corporations that knowingly make false statements to any department or agency of the U.S. government). The reach of the FCPA is two-fold as if deals with payments to government officials and corporate accounting and control practices. The US companies shown that payments to government officials, it made out of funds and it is not recorded on the company‟s book or it were described and it also made from if it recorded funds. So that, the FCPA don‟t not make by crime Journal of International Finance and Economics, Volume 8, Number 4, 2008 169 only to bribe a foreign official, but also to make false or misleading entries on a company‟s books for any purpose whatsoever. Nevertheless, the impact of corruption on business and social is rather simple, it exchange resources from productive to non- productive sectors, and it makes few rich at the expense from others resource. The corruption dangerous investor confidence stifles economic growth and it also increases the risk and cost of doing business, deters foreign direct investment. The Word Bank (World Development Report, 1997) suggests what it is important and said that “…some governments reliably deliver what is bought with bribes, while other governments do not.” In this paper corruption is viewed from the point of view as how it is perceived to exist in developed countries. 12 2.2.Accounting behavior and its relation to corruption Nowadays, If the technology always development fast in modern society, the corruption call it bane. The globalization and a long with prosperity and process are as agent of change in international trade. It was done increasing internationalization of business and it lead to propagate the dark side of domestic practices and it also increased the specter of corruption. In fact, the globalization exchange daily economic life, and turned companies into global institution. It also creates a continuous movement to avoid homogeneous culture and business. Although corruption effectively to social unrest, but it can complete the steps take to control it. To combat corruption, they are universally accepted set of financial standards, or to strive toward high level of economic development, and the construction of culture to avoid uncertainty in the system operations country. In fact, corruption takes many forms such as briery, fraudulent, illegal, and payments, extortion, smuggling and laundering. Therefore, the accounting scandals of business of all sizes, anywhere and malicious intention of the corrupt individuals create chaos and sought personal enrichment at tremendous cost to others, leaving financial ruin. The accounting scandals recently showed how the business of all sizes, any position, vulnerable to the evil intentions of the corrupt individuals who make a mix disorder and seek personal enrichment at great cost to others, leaving a legacy of financial ruin. Corruption takes many form, including bribery, fraud, illegal payments, money laundering, smuggling, extortion, and nepotism. Although corruption includes a range of issues and occurs on many fronts, there is no panacea, the struggle to stop it completely - or at least limit it... 13 Perhaps one of the first issued of determining what corruption really. It is found in the literature focus on the abuse of the public role and private resources to achieve. The effects of corruption on economic performance for countries and individuals to change the conditions, it is negative to force the government to intervene, but they do not or will hinder the government from implementing the policy, enforcement of legislation. Besides, it can not reduce economic efficiency when the company allowed avoiding confiscatory taxes and restrictive regulations. The reduction of why corruption is a major ethics aside the corruption because it reduces the cost of cutting bureaucratic red tape and make public officials more flexibility. In fact, corruption is an important role to strengthen its role effectively, and it suggests that the size of bribes paid by the different economic agents may reflect different opportunity costs their targets, "Pareto - optimal" allocation. In addition, the impact of corruption increases the risk of damage and investors confidence, stifles economic and prevents foreign direct investment and it has been made of social exchange as it moves towards the source resources from production and non-productive and enrich a few wealthy at the expense of everyone else. International standards of financial reporting, and strengthen economic development, building a culture of avoidance of doubt, an effective legal system, and the audit committee activity is one of the weapons used in the fight again corruption. 2.2.1 Accounting transparency and accounting regulation Accounting transparency was effected to function of financial markets. 14 In recent years, transparency has always been a spiritual image that is something that allows light to pass through it and have the policy debate to find ways to include financial statements, accounting standards mathematics, and mold suffering the amended provisions to increase transparency as the time protect investors. From a financial perspective, transparency means that "... an easy way out or discovered, clear guileless (free of deceit, cunning, craftiness), frank, open" (Fons, 1998). The financial information can change in financial status that reports honestly and immediately all the parties involved. In fact, the transparency should be reflected reality. If it reflects the lack of transparency, it can be shown by the delay means that the financial statements, structure complex transactions. Besides, it also lacks timely information about the material facts and omissions of the economic events and lax accounting practices. Moreover, the transparency results a number of factors such as shareholder activities, regulations, and enforcement of professional and ethical management (An war and Tang, 2003). Therefore, it would accept the decision made for both shareholders. The lack of transparency is one of the reason to lead that company must pay higher cost of capital and fail in attracting for foreign investor. Elorrieta (2002) suggests that “…the issue behind transparency and disclosure is accountability”. Bushman, Piotroski, and Smith (2004), identified “financial transparency” and “governance transparency” as two dimensions of corporate strategy. “Financial transparency”, summarized the “… movement among the intensity and timeliness of financial disclosures, analyst following, and media penetration”, while “governance transparency”, “…captured the co movement among the intensity of governance disclosures and the intensity and timeliness of financial disclosures”. These authors also offer evidence that, whereas financial transparency is mainly related to the political regime, governance transparency 15 is related to the legal/judicial regime (Bushman, Piotroski, & Smith, 2004). Accounting transparency can negatively affect and it is a higher level accounting standards and it leads to exact a higher cost of capital. A separate strain of the literature shows that while accounting transparency can have a negative impact, a higher level of accuracy of accounting standards may lead to a higher capital cost. While previous studies have documented the benefits of information disclosure (Bignon & Breton in 2004, Diamond (1985) and Fishman and Hagerty (1989 & 1990), literature, said the case has much public information and social undesirable. In fact, Hirschleifer (1971) show that public information could harm the chance to share risk and it also revealed exclusively. In addition, it can be beneficial to make a competitor of the company and a stand down and cash flow (Dye, 1985). So it can confidently value to the enterprise (Campbell, 1979), it is the same time influence the choice of companies for financing (Bhattacharya and Chiesa, 1995, and Yosha (1995 ) However, it is not needed too much data to improve transparency honde Carey and Parker (2002) postulate that "... investors drowning in data more and more does not make the company more transparent." In fact, many companies see information about the process and it is not likely to use such information. So the real subject: the definition of transparency is "... not about how much information is provided, but the way that data is useful to consumers in their goal of understanding and evaluating a business with ". As such, the transparency becomes a question "to access the ability to use" rather than "information access" (Carey & Parker, 2002). 16 Moreover, Accounting rules are not only indispensable for the smooth running of capital markets and promote market liquidity, but it is very important in reducing asymmetric information, and reporting uncertainty. It can be seen as a tool to greater transparency in financial reporting as well as evidence of a system of national accounting. In this paper, the accounting regulations are as viewed from the perspective of the use of the audit committee and from the perspective of the use of international standards of financial statements (IFRS). Audit Committee is responsible for monitoring the function of corporate finance and enforcement of accounting standards. IFRS is currently receiving global attention as they are ready to become a common platform to make financial in order to report understandable and transparent to facilitate the raising of capital across borders. They are touted as a measure of international accounting reports. Move towards the global use of IFRS appears to be the new mantra for transparency as well as another tool in the fight against corruption. Corruption is no discriminate between developed and developing countries. As a matter of fact, corruption knows no borders and engaging in all four corners of the globe. The adverse effects work for the perpetrators of corruption in particular, and the economic in general which are well documented. Whether it is in the form of bribes, pay oil, or illegal gifts, corruption is a fact exists in every society. The accounting scandal occurred at the beginning of this decade as a result nothing more than blatant corruption. It can be argued that each country considered a bribe in any form is illegal. However, strong pressure accompanied by fierce competition to get or do business, could lead to international bribery. The tendency to bribe to obtain an unfair advantage is as real as it was at any time in the past. 17 It is very appealing to large corporations from developed markets to offer bribes to win contracts in emerging markets. U.S. companies have been prosecuted under the Act bribe corrupt foreign practices in 1977. Development and Organization for Economic Co-operation (OECD) introduced the anti-bribery convention banning bribery of foreign official‟s landmark. It trends in bribes to increase awareness about corruption in any country. 2.2.2 Corporate governance and auditing for corruption Corporate governance and business direct control by system of company. Traditional views about the role of company is best stated by Milton Friedman, who argues that corporate governance conduct business in accordance with the shareholders or owners, desires, which generally will be to make as much money as possible while consistent basis with the rules of society expressed in law and local custom "(quoted in the Indian information 2005). Accountants have a role in the implementation of corporate governance and it has advantages such as creating favorable conditions for capital investment and minimize risk through a number of limited liability for shareholders, and management company from those who contribute resources, such as shareholder issues. This mainly, it causes corruption. For example, in the case of Parmalat, which forged documents to conceal debt and the flow of the cast for the family members (Economist 2004), however, more subtle, and the scandals of argued the company was reporting "false”. Moreover, sometimes it motivated to maintain the value of profits by the desire and it provided to business managers (such the value of share options).Accounting is clearly a central role 18 in directing and controlling a company. Internal accounting information (accounting manager) provides an important part of the information on which the companies operate will be decided. For example, estimated production costs, saving outsourcing costs or the costs involved in reducing the environmental impact of the manufacturing process often will be influential in determining a how it operates. In addition, external accounting is to track, monitor and evaluate corporations like those responsible for managing the corporation has been made. Furthermore, requirements for companies providing financial reports, and for the audit, can be identified as perhaps some other corporate activities early, even before the time limit: corporate governance. The origins of corporate governance can be found in the desire to improve transparency and accountability of financial statements of listed companies to their shareholders, it has grown far beyond this transparency and accountability is fundamental (HKSA 2004, p 2) In addition, the auditors also affect corruption in the organization. The auditors have to do is to write an audit program in accordance with the objectives of the audit corruption. It follows to under standard and operating procedures to develop an audit program. It focuses on corruption and the ability to detect opportunities for corruption, the auditor should develop: transparency, good governance, the economy, efficiency, and effectiveness. It is generally understood that the audit can help detect corruption. Audit to comply with and implement plans will highlight areas of inefficiency, diseconomy and not achieve the results and impact. The argument is that if a project or program has been planned properly, it will be able to make it relevant by the economy and efficiency, and it must achieve its results. If it exceeds the cost of his plan significantly or takes longer than expected or did not achieve what was intended, then there is a possibility 19 that those involved in its management may have indulged in corruption. Although the argument is plausible, but the existence is inefficient or ineffective diseconomy is not a conclusive evidence of corruption. There may be genuine reasons for the failure of man, or the complex environmental factors and constraints that inhibit the achievement of objectives. Maybe, just, is a case of human negligence is not intentional, not taking into account all the risks and costs. Therefore, the audit done on a regular basis may not indicate a specific evidence of corruption. 2.3 Code of ethics for professional accountant Corporations are artificial legal development. People make decisions in the company (whether directors, executives, auditors, accountants or other personnel) and finally, good corporate governance is the people making the "right" decision regulations. Making the right decisions require people to behave ethically. Ethics is a discipline in its own right, but will not be considered specific (such as alternative moral theory) here. However, in simple terms, ethical behavior can be equated with the popular concept of 'do to others as you would have done unto you "(Cowan 2004, p 9) The business accounting documents "professional" has long emphasized the importance of teaching ethics in the accounting program and emphasize the nature of ethics and its importance related to professional behavior industry (eg, Coppage, 1 * ^ 92; Siegel et al, 1997). Research ethics in accounting indicates that ethical considerations are important to the professional status of accounting (for example, Ponemon, 1992) Associations related to professional accounting certification to provide professional guidance accounting certification (CPA) has decided to face the dilemma of ethical 20