The Impacts of Internal Audit Practices on the Quality of Internal Control in Vietnamese Smes

Purpose: This study examines the impacts of internal audit practices on internal control in Vietnamese SMEs. Theoretical framework: This paper employs the three lines of defense model framework to study the impact of internal audit practices on internal control in Vietnamese SMEs. Internal auditing practices were measured by the items listed in the attribute standards and performance standards of the International Professional Practices Framework (IPPF). Internal control quality includes control environment, risk assessment, control activities, information and communication, and monitoring which are provided by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) Framework. Design/methodology/approach: We collect primary data using questionnaire. Data collected from the questionnaire is divided into two groups (1) the measurement of the internal auditing practices and (2) the measurement of the quality of internal control system. We then use the Structural Equation Modelling (SEM) to test for the hypotheses related to the relationship between internal audit practices and internal control. Findings: Our results suggest that both attribute standards and performance standards have positive impacts on the control environment, risk assessment, control activities, and monitoring aspects of internal control. Meanwhile, internal audit seems to not influence the information and communication. Research, Practical & Social implications: The study contributes to the literature by shedding light on the impacts of internal audit practices on the quality of internal control in Vietnamese SMEs. Originality/value: This study examines the unique context of Vietnamese SMEs. Ultimately, the framework aims to provide a comprehensive understanding of how internal audit practices impact internal control quality in this specific context