GOVERNANCE AND STRATEGY FACTORS INFLUENCING THE QUALITY OF INTERNAL CONTROL OVER FINANCIAL REPORTING: INTERNATIONAL EVIDENCE AND LESSONS FOR VIETNAM

Abstract

This paper conducts a systematic review of international literature to analyze the determinants of internal control over financial reporting (ICFR) quality. The research identifies two main impact mechanisms: (1) A direct mechanism from corporate governance factors (such as an independent Board of Directors (BOD) or Audit Committee (AC), a high-quality internal audit function) exerting monitoring pressure to prevent material weaknesses (MW); and (2) A more sustainable indirect mechanism whereby strategic choices (investments in information technology (IT) governance, enterprise resource planning (ERP)  systems, risk management) shape and reinforce the internal control itself, particularly the control environment. The paper proposes an integrated model, emphasizing the combination of oversight and strategic investment to achieve high-quality ICFR. It also draws critical practical implications for Vietnam in the context of digital transformation and institutional improvement.