Research on factors affecting the level of applying risk-based internal auditing in Vietnamese commercial banks

Abstract

In the past twenty years, the improvement of risk management, internal control and internal audit
in Vietnamese commercial banks has been increasingly focused. The risk-based internal audit has been
launched by a range of international professional associations and organizations of auditors, but so far, the
implementation in the Vietnamese market, in general, and in commercial banks, in particular, is still limited.
The desire to find out the factors affecting the level of applying risk-based internal audit in Vietnamese
commercial banks motivated the authors to conduct this study. The paper has combined both secondary
data from the banks’ annual reports and primary data from the survey into one research model. Regression
analysis with Tobit shows that aspects of Risk Management, Size and complexity in structure, Corporate
Governance and Competence of Internal Auditors impact on the level of implementing risk-based internal
audit in Vietnamese commercial banks. Specifically, the risk management capacity, the complexity in
structure, the proportion of non-executive board members, the bank with a foreign bank as strategic
shareholder, and the competence of the internal auditors positively impact on whereas the level of risk, the
size of the bank, banks with a dominant share by the state and the board size negatively influence on the level
of implementing risk-based internal auditing.