THE SOLUTIONS TO ENHANCE THE USE OF MANAGEMENT ACCOUNTING IN SMALL AND MEDIUM ENTERPRISES IN THAI NGUYEN PROVINCE EXECUTIVE SUMMARY CENTRAL PHILIPPINE UNIVERSITY DOCTOR IN BUSINESS ADMINISTRATION TRUONG THI VIET PHUONG DECEMBER 2016 Title: The solutions to enhance the use of management accounting in small and medium enterprises in Thai Nguyen Province Total No of pages: Researcher: Truong Thi Viet Phuong Degree Program: Doctor of Public Administration Institution: Central Philippine University Jaro, Iloilo City Region VI Rationale/ Introduction of Study In Vietnam, over the years, SMEs have developed throughout the country and they are considered the ‘backbone’ of the economy Currently, along with the process of economic reform, Vietnam has been actively promoting international economic integration; especially, Vietnam has joined the World Trade Organization (WTO), a global trade organization The process of integration has a strong impact on the economy in general and businesses as well as SMEs in particular, which has set up a more favorable business environment, helping SMEs have more opportunities to develop When starting the international integration, enterprises in Vietnam in general and the small and medium-sized enterprises (SMEs) in particular face new opportunities and challenges With small production scale, difficulties in access to funding and low-level employees etc , especially SMEs are not used to applying management accounting to operation, so they are at a disadvantage when competing with large corporations and foreign corporations Under the general terms when joining the WTO and other trade organizations such as ASEAN or the signing of free trade agreement between Vietnam and the Eurasian Economic Union on May 29, 2015, Vietnam has to gradually dismantle tariff barriers so that trade becomes easier But it also means that the level of competition will become more acute (The Working Committee on the Accession to WTO of Vietnam, 2006) However, a worrying problem herein is that Vietnam’s economy has slow reform from its inside due to the characteristics of transform from subsidized economy into socialist-oriented market economy Therefore, SMEs not only take advantage of many opportunities but also face many difficulties created by integration process Once the business environment changes according to the trend of global integration, Vietnam’s managers must cope with a major challenge which is that they have to use new management tools in order to respond and increase competitive advantage of their businesses Therefore, more than ever SMEs have to rapidly use management accounting to help managers get the timely, appropriate and effective information to support the decision-making process However, because the market economy has been formed later than other countries in the world, teaching of management accounting in Vietnam only started in the early 1990s of the 20th century; therefore, today most of the accounting departments in SMEs in Vietnam are still unfamiliar with the use of management accounting Through the author’s preliminary survey as well as previous researches, so far the application of management accounting to management operations in SMEs are still limited; consequently, the application rate of management accounting in SMEs in general is still low, applied technical tools of management accounting are mostly traditional technical tools and the effectiveness contributed to management affairs is not high However, in fact the application of management accounting is influenced by many factors inside and outside the enterprise, and these factors may increase the feasibility of applying management accounting in SMEs in Vietnam or and vice versa Although 2015 was a difficult year for the national economy in general and economy of Thai Nguyen Province in particular, with the efforts, creativity and determination of both political system and business community, the province has successfully completed its task: Its Gross Regional Domestic Products (GRDP) in 2015 was estimated to increase by 25.2% compared to them in 2014, in which the agriculture, fishery and forestry increased by 4.8%, contributing 0.84 percentage points to the overall growth rate; industry and construction went up by 45.5%, contributing 21.4 percentage points; the service sector increased by 8.4%, contributing percentage points to the overall growth rate (according to Report No 235/BC-UBND dated 13/11/2015 of Thai Nguyen Provincial People’s Committee on reporting results of implementing socio-economic development tasks in 2015) To achieve these important results, Thai Nguyen has always recognized the efforts of enterprises in production and business activities, and their efforts to overcome difficulties and preserve their sustainable value, maintain life and stable jobs for their employees, and have effective contributions to the local budget At the same time, the enterprises always take good social responsibility, pioneer in poverty reduction, actively participate in humanitarian activities, charitable activities, social welfare activities, etc… However, in the situation of international economic integration and multilateral cooperation at present, the SMEs in Vietnam in general and those in Thai Nguyen Province in particular are not only under the competitive pressure with domestic companies but also compete more severely with multinational corporations which are much more powerful in terms of capital, trademark and management skills Thus, to be competitive, Vietnamese SMEs have to find themselves a reasonable path for their own survival and development One of the necessary solutions is to save production costs and improve management efficiency, etc… in which accounting information plays an important role as basic information Therefore, if SMEs want to have sustainable development, they must have good and efficient accounting system However, few SMEs can accomplish that goal because most of them are the newly established enterprises with limited capital Having a good accounting system requires enterprises to invest heavily, so few companies are able or dare to this Therefore, the commonly current solution is hiring professional accountants to work overtime or hiring low level ones with affordable costs Consequently, businesses will have an inefficient accounting system, not providing timely information for decision making Thus, it is urgent to raise the awareness of role of accounting system in general and management accounting in particular for SMEs to overcome difficulties, enhance the efficiency of managers’ decision-making for sustainable development of enterprises The study evaluating the use of management accounting of SMEs in the province of Thai Nguyen, identify and analyze the factors affecting the tendency to use management accounting in Thai Nguyen SMEs, from propose solutions that contribute to improving the use of management accounting in SMEs Thai Nguyen Statement of the Problem • General Along with systematizing theoretical and practical basis of management accounting in SMEs, the dissertation will analyze and assess the situation of the role of corporate management accounting system It will identify and analyze the factors affecting the tendency to use management accounting in the SMEs in Thai Nguyen Province to propose solutions to contribute to enhancement of management accounting use in the SMEs of Thai Nguyen Province • Specific - Systematizing the theory for SMEs and corporate management accounting - Assessing the situation and role of corporate management accounting system - Identifying and analyzing the factors affecting the tendency to use management accounting in the SMEs in Thai Nguyen Province - Specifying the nature of limitation and inadequacy of management accounting to provide the solutions that enhance the efficiency of use of management accounting in the SMEs in Thai Nguyen Province Research process of the author as below: Scientific basics of research: - Enterprise management, small and Step medium-sized enterprises Documentary research - Management accounting - Factors affecting to trend of using management accounting system Prepare Draft survey questions Select key groups Step Preliminary Survey Step Prepare official survey questions Data processing: Descriptive statistical analysis, correlation analysis Inspect regression model Official investigation Research result Figure 3.1: Research process Research process of the author as below: Step 1: Study and research documents, read and refer to secondary data in reports, books, papers, newspapers, specialized magazines, websites of enterprises, and etc as well as previous researches to capture an overview of topic - Systemize theoretical basis of small and medium-sized enterprises, enterprise management, and contents of management accounting, model, and trend of using management accounting in enterprises - Determine factors affecting to the trend of using management accounting in SMEs After that, prepare draft survey questions: Use detailed questionnaires, and directly discuss to determine information demand Questionnaire is designed as suggestive and easy to understand Step 2: Bilateral discussion skill and in-depth interview with experts are focused in this research and it is used to adjust and supplement for theoretical scale of factors affecting to management accounting usage, then establishing official questionnaire Step 3: Official investigation: Directly interview with official questionnaire (adjusted through the first survey), have explanation of contents, so interviewees can understand and answer exactly according to their assessments Data processing, descriptive statistical analysis, correlative analysis and provide research result Study population and ampling Technique Based on theory as well as establishing expected measurement scale in the first step to measure factors in proposal research model Structural equation modeling (SEM) requires large samples to ensure necessary reliability of model (Raykov and Widaman, 1995, extracted from Nguyen, 2002) However, researchers have still not confirmed what is considered as large sample According to Hair & his partners (2010), sample size shall be considered in relation with estimated parameters and if using maximum likelihood method (ML), minimum sample size is from 200 to 300 There are many researchers said that minimum sample size is 2000 (Holter, 1983, extracted from Nguyen Dinh Tho and Nguyen Thi Mai Trang, 2008) In addition, according to Bolen (1989), necessary rate of sample size is: need at least five observations per each estimated parameter (5:1 ratio) According to above discussed, if based on Bolen’s opinion, there is at least five observations per each estimated parameter, this research has total estimated parameters of n=30, so minimum sample size is 150 (complying with 5:1 ratio) If based on opinion of Hair & his partners, minimum sample size is over 150 observations However, the larger sample size, the higher requirement of minimum reliability (reduce sampling bias) This research shall apply probability sampling method with sample size n = 200, showing chief accountants or enterprise owners working in 200 enterprises with business registration in Planning and Investment Department of Thai Nguyen province, people provide information has long experience, actively joining in professional activities of small and medium-sized enterprises so they understand actual operation status of enterprises in the province However, in fact, probability sampling method requires a lot of effort; the result may be not adequate; therefore, depending on investigating process, the author can select non-probability sampling according to the suitable trend but still ensure the highest representative Currently, in Thai Nguyen province, there are about 5,000 working enterprises, including 4,914 domestic enterprises (small and medium-size enterprises account for over 97%) with total registered capital is about 34,669 billion dong, there is 86 FDI enterprises with total registered capital of over 7.1 billion USD, equal to 155 thousand VND Structure, scale, operation sector of enterprise has changes consistent with economic structure change according to towards increasing the share of industry, service; operation efficiency and competitive capacity of enterprises is increased, thereby contributing to development of the province By the end of 2015, economic growth of the province reached 25.2%, average GRDP per people reached 46.4 million dong, state budget in 2015 reached 7,285 billion dong; economic structure had clear change: industry and construction accounted for 49.4%; agriculture, forestry and fishier accounted for 16.6%; service accounting to 34%; industrial production value reached 365,203 billion dong, reduced poverty rate to 2% compared with previous year Therefore, method of sample selection is non-probability with 200 enterprises in various business lines are existing and has financial statement, tax statement within at least years until end of December 31, 2015 Enterprises in the survey are limited company and joint stock company in Thai Nguyen province PERFORMANCE SHARE ALLOCATION SURVEY BY SECTOR 9% 4% 15% Trade business 11% Building materials 21% Construction 11% Food, Chemical Aquaculture, agriculture 8% 23% Mining Industry manufacturing Others Data Processing and Analysis According to documents of research method, some investigation methods are recognized: observation, direct interview, interview via telephone, email, investigation via email, direct investigation Selecting research method shall depend on target of investigation and each method has potential advantages and disadvantages In above investigation method, direct interview shall have highest respond rate Also in this method, investigator can use physical stimulation to support interview It also allows investigator to clarify (explain) obscure or complex questions However, this method also has potential tendency of prejudice (this also happens in various attitude of investigating objects), leading to misleading investigation result In addition, this is also the most expensive method Despite above disadvantages (prejudice tendency, high cost), direct interview still has advantages (high respond rate, in-depth interview) suit with required purpose of this research In addition, high respond rate shall affect to decrease potential deviation (prejudice tendency) Therefore, this research applies direct interview for investigation and data collection Time for issuing survey form: 15 December 2015 to 15 January 2016 Selecting investigating objects or information provider is one of important condition in research of management in accounting – auditing sector, especially the trend of using management accounting of SMEs in Thai Nguyen province In order to answer investigating questions, information provider shall be chief accountant or enterprise owner of enterprises in Thai Nguyen province, with long experience, actively joining in specialized, professional operations, managing small and medium enterprise to know operation status of enterprises in the province Design questionnaire Questionnaire is one tool used to collect data Questionnaire includes group of questions and answers arranged in one logical order Questionnaire is one mean to communicate between researchers and respondents in all interview method Normally, there are eight basic steps to design one questionnaire as below: (1) Determine required data: based on target and contents of research, to determine specifically overall research and contents of required data; in this research, it is measurement of factors affecting to the trend of using management accounting of SMEs in Thai Nguyen province (2) Determine interview method: depending on interview method (email, telephone, direct interview, email interview, etc.) shall have different questionnaire In this topic, the author determined that interview method is direct interview through participants shall answer and confirm when questionnaire is not clear (In some cases, far from the author, the author shall send via email and post, then call to notify and confirm) (3) Outline contents of questionnaire: Corresponding with content of research, outline questionnaire Need to arrange questions according to each topic reasonably (See more detail in appendix of the thesis) (4) Select type of question: There are various questions designed for questionnaire, however, in this topic, the author uses questions in order of Likert measurement scale with order levels and respondents only read contents and make cross in box with suitable answer (See more details in appendix of this thesis) (5) Determine suitable words for questionnaire: (6) Determine structure of questionnaire: The author shall arrange questions in logical sequence These questions shall lead to next questions in reasonable sequence, according to one continuous thought A major problem shall be divided into several minor problems In answers, also raise questions to continue sorting information Structure of questionnaire: including parts: -Opening: There are cozy effect to make the cooperation of the respondents at the beginning of the interview -Quantitative question: Determine interviewed subjects -Warming question: Remind to focus on topic of questionnaire -Specific question: Make research contents clearer -Sub question: Help to collect more information on characteristics of the respondents (gender, age, career, etc.) (7) Design the presentation of questionnaire: questionnaires are designed in A3 or A4 paper with structure as point (6) and send via email and then printed in A4 paper to facilitate question, storage and statistic (8) Trial to test questionnaire: after setting up, questionnaire will be sent for 30 respondents first (of previous survey) to collect their opinion and adjust final questionnaire before mass deployment After measurement scale of survey factors is inspected, it shall be processed by running linear regression with minimum ordinal least squares (OLS) with both Enter method and Stepwise method After setting up regression model with minimum total square method To ensure reliability of model, the author conducts testing satisfaction of theories of OLS method Including: After collecting data from SMEs, it is necessary to check and reject unqualified questionnaire Next, conduct to encode data, data entry, clear data Then analyse data with support of SPSS 22.0 software and following method:  Analyse reliability with Cronbach’s Alpha coefficient: According to “Hoang Trong and his partners, 2005”, reliability meets requirements when Cronbach’s Alpha ≥ 0,8; Cronbach’s Alpha from 0.6 to above can be used in case research concept is new or new for interviewer in research context (in case topic – exploration research), so when testing, shall use Cronbach’s Alpha ≥ 0.6  Exploratory Factor Analysis: used to shorten multiple, dependent observation variables to one group with less variables, so they are more meaningful but still contains information of original variables (Hair and his partners, 1998) Number of factors: Determined based on Eigenvalue index representing for fraction of variables explained by each factor According to Kaiser standard, these factors having Eigenvalue less than shall be rejected in research model Factor extraction method used in this research is Pricipal Axis Factoring with Varimax rotation Principal Axis Factoring method will give us number of minimum factor to explain common variance of observed variables during interaction between them Measurement scales meeting requirements on reliability shall be used to analyse factors to shortent one group including multiple observed variables to one variable (called factor); these shortened factor will be more meaning but still containing information of original observed variable (Hair, Anderson, Tatham and Black; 1998) Exploratory factor analysis EFA is used to test coneptual value of measurement scale (according to Le Ngoc Duc, 2008) - Testing Bartlett: observed variables are correlated with each other in the overall - Consider value KMO: 0,5 ≤ KMO ≤ 1, factor analysis is stuiable with data; On the contrary, KMO < 0,5, analyse factor which is possible to not suit with data (Hoang Trong & Chu Nguyen Mong Ngoc, 2005) - To analyse EFA with practical value: conducting reject observed variables with load factor coefficient < 0,5 - See Eigenvalues (represented for variance explained by each factor) having value > - Review total extracted variance (≥ 50% is required): show that extracted factor explains % of variance of observed variables  Implementation method and evaluation criteria in exploratory factor analysis EFA: - Using extracted factor method is Principal components with Varimax rotation and stop point when extracting factors with Eigenvalues =1 With single-direction scale, use extracted factor method is Princial components Reject variables in factors (called load factor coefficient) less than 0.4 and total extracted variance is equal or more than 50% (accepted scale) (Gerbing & Anderson, 1988; extracting according to Nguyen Dinh Tho & Nguyen Thi Mai Trang, 2009) - Standard for load factor coefficient is more or equal to 0.5 to ensure practical significance of EFA Values of load factor coefficent: more than 0.3 is minimum; more than 0.4 is important; more than 0.5 is practical meaning Standard to select load factor coefficent: minimum sampling size is 350, can select load factor coefficient > 0,3; if sampling size is about 100, select load factor coeffient > 0,55; if sampling size is about 50, load factor coefficient is > 0,75 (Hair, Anderson, Tatham and Black; 2008) Regression analysis: Used to simulate cause and consequence relationship between variables, in which one variable called dependent variable and other variables called independent variables Suitble level of model is evaluated by adjusted R2 Value of adjusted R2 doesn’t depend on magnification deviation of R2 so suit with multiple variable linear regression Testing ANOVA used in testing suitability of model, it means that it have or does not have one relationship between independent and dependent variables The nature of testing ANOVA is to test F whether dependent variable is linear relating to independent variables and assume H0 said that βk = F is calculated from value of R2 of full model, value Sig is less than testing significance level shall help to confirm the suitability of regression model Un-standardized B coefficient reflects variance of Y when one X unit changes While standardized Beta coefficient reflect variance of standard deviation of Y, when one standard deviation of X changes More specifically, standardized Beta coefficient is result of solving regression equation in which independent, dependent variables are standardized (variance=1) Non-standardized B coefficient is result of solving regression equation in which variables remain original value Standardization of Beta coefficient used to answer question: which independent variable has stronger impact to dependent variable when using multiple variable regresson analysis, when independent variables having different unit Therefore, we select coefficient of regression model is non-standardized B coefficient - In case residual variance change: The author used correlative Spearman to check theory of residual variance change - Testing multicollinearity in mode: Multicollinearity is one case in which independent variables correlating closed Problem of multicollinearity is that they give model with the same information and difficult to separate affect to each variable For multicollinearity, tolerance or variance inflation factor VIF, when VIF is less or equal to 2, it means independent variables have linear correlation with each other - Testing change of variance: Variance change is case that variance of this term is not the same When variance of variables change, estimation of regression coefficient is not effective, testing t and F is not reliable If magnitude of standardized residual increases or decreases according to estimation, then assumption of consistent variance is violated - Testing autocorrelation: this is one type of violation of basic interference item, consequence when ignoring correlation is forecast and estimation still remains unbiased and consistent but not effective In that case, testing Durbin-Watson is the most common testing for first-order correlation Research hypothesis shall be tested through researched data of regression equation established Testing criteria used t statistic and p-value (Sig.) in respect, reliability is taken as 95%, p-value will be compared directly with 0.05 value to accept or reject research hypothesis To review suitability of data and suitability of model, we use R-square coefficient, t statistic and F to test In order to evaluate importance of factors, we consider corresponding Beta coefficient in regression equation established from research data Finding Factors selected as independent variables as Management support, Labor – inventory; Apply quality standard; Strategic vision; Simplify strategic connection Dependent variable is the trend of using management accounting of SMEs in Thai Nguyen city Both primary and secondary data were used Questions and scale shall base on research of Fullerton, Rosemary and Kennedy, Frances A (2009) Likert measurement scale with points has been used Organization as well as supplier, factors and assessment result of research subjects are stated in Appdendix Secondary data is collected from annual report of company “Descriptative statistic” and “correlation analysis” as well as “OLS linear regression” are methods used to analyze data Research models and hypotheses are shown as below: The trend of using management accounting Support of management Labor - inventory Apply quality standard The trend of using management accounting Strategic vision Simply strategic connection Figure 3.2: Research model The research result has helped the author answer the two questions raised in the part of research objectives: (1) The factors affect to the use of management accounting in SMEs in Thai Nguyen province (2) Impact level of each factor to the use of management accounting in SMEs in Thai Nguyen province (3) Implication of solutions to enhance the role of the MA in SMEs in Thai Nguyen province For the first question, the research result shows that, in research condition at an enterprise, the factors in original model of Fullerton, Rosemary and Kennedy, Frances A (2009) not form different concepts Specifically, the research of the management accounting use is subject to direct impact of factors in the assumption model: In which, the impact factors are Management support, Strategic vision, Strategic Alliance, Inventory labor; Apply quality standard and dependent variables of the use of management accounting in SMEs in Thai Nguyen province For the second question, the research result shows that the factors positively affect the use of management accounting in SMEs in Thai Nguyen province, however, their impact levels are different In which, the most influential factor is Management support with β1=0.410 that means this factor explains 40.9% of the impact significance to the management accounting use in Thai Nguyen province, Strategic alliance is a positive impact factor to the following model with β4=0.217 Applying the quality standards positively affects the use of management accounting in SMEs in Thai Nguyen province with β5=0.148, inventory labor factor also has positive impact with β3=0.146 of the MA use Meanwhile, the strategic vision factor positively affects the weakest model with β2=0.137 At the same time, the analysis result shows that sig of 05 factors are smaller than 0.05, so we can conclude that these factors have statistical significance The model without phenomenon was collinear, variance was changed, linear association and equal variance of the first regression was not infringed, the distribution of the remainder was approximately normal The above factors explained 52.595% of the significance of regression model of the factors affecting the use of management accounting in SMEs in Thai Nguyen province Management support with β1=0.410, the research result is in line with the previous research which supports to the opinion of manager’s commitment and the participation of operation staff that are very important factors in the successful implementation of new business operation Ramarapu et al (1995) concluded that the important factors for the successful JIT application included manager’s commitment and the staff’s participation Similarly, multiple previous scientific research works suggested that the management role was a strong forecast factor that affects the performance of enterprise from the interventions such as TPM, TQM, and JIT into production and business operations (Cua et al, 2001; Flynn et al.,1995; McLachlin, 1997; Samson and Terziovski, 1999; Ishikawa, 1985; Deming, 1986; Powell, 1995; Ahire and O'Shaughnessy, 1998; Kaynak, 2003) Park (2003) suggested that the successful implementation of philosophy required that CEO should deeply understand the philosophy To succeed, any major change in strategy and culture of an organization is firstly accompanied with the efforts of senior management (Kaynak, 2003) Strategic Alliance with β4=0.217, the experimental research in SMEs in Thai Nguyen province shows that the management framework of traditional relationship means the company must be ready to conduct significant changes in their accounting system The majority of responders said that the management accounting system of enterprise has not effectively supported to strategic initiatives The main reason is the financial analysis, production and business operation forecast have not performed fully in accordance with procedures, the enterprise sometimes has good initiatives but due to the lack of impact factors such as economic impact, unusual changes of policy, non-invested quality management that lead the forecast, product policy and competitive policy is very difficult Therefore, the management does not have favorable conditions to make decision of strategic planning timely, accurately and scientifically Labor and inventory factor with β3=0.146, the research result also unifies the opinion with previous research to indicate that labor is one of the pillars of production system (Liker, 2004) This shows that the economic environment should use labor resources, listen to their feedback and take into account their participation into the decision making It is very important when staff is notified about the company’s strategy, and likely to make operation decisions and adjustments for working (Fullerton and McWatters, 2002) Ittner and Larcker (1995) stated that management accounting plays an important role in a comprehensive quality management environment that means to authorize the labors with information to resolve issues and continuously improve activities In JIT environment, according to Bank et al (1993), the labors are entitled to control production activities that require their participation in resolving problems In many cases, the employees in this environment are provided information to allow them monitoring production procedures (Kennedy and Widener, 2008) The following accounting features reduce the success of operation environment of enterprise: the dependence in standards; the emphasis on variance and calculation efficiency; the concern with DL; inventory monitoring; and cost allocation based on DL (Green et al., 1992) The use of traditional labor and tools such as volume and efficiency of criteria encourages excess production and redundant inventory (Fullerton and McWatters, 2004) The solution is management of cost, labor, inventory and products Strategic vision with β3=0.137, the research result in SMEs in Thai Nguyen shows that it requires the close cooperation among all participants into production and business process The cooperation level requires the direct communication among the participants in the tasks Using the strategic vision, labors may easily determine the production needs and communicate with techniques with necessary help Williams and Sackett (2003) proved that the data of strategic vision is updated in both history time and actual data as well as the remedy on time as needed Parry and Turner (2006) said that the important thing was to create value strings to authorize to design effectively their own strategic vision and support business goals Instead of waiting for the managers to guide the work based on monthly accounting report, labors are authorized to use the control system of strategic vision implementation process to monitor their efficiency To enhance the effectiveness of strategic vision in management accounting, the enterprises should perform the solutions such as training to enhance knowledge, encouraging staff to monitor, resolving problems of the company together, quality management, and improving effectiveness of the available training source Apply quality standards (β2=0.137), stable flow of products is maintained during the activities and focusing on production is to determine to remove waste In this environment, the labors must be provided accurate information to determine and limit waste and troubles promptly (Maskell and Baggaley, 2004) Although the scholars have warned for years that the current accounting systems are out of date for new production environments, most researches show that the companies continue based on regular accounting systems, even in sophisticated production environment (Fullerton and McWatters, 2004) Currently, the companies in Thai Nguyen province have not reduced inventory effectively, consequence is that business efficiency has not really met the expected requirements, the work establishment is still waste of time leading the work efficiency and productivity has not met the requirements According to survey of quality verification system, the enterprises’ representatives regularly apply Kaizen standard and 5S model This provides management implication on quality standard application, the implication content includes inventory management, work establishment time management, application of Kaizen standard and 5S model It can say that financial accounting for Vietnamese enterprises is currently the most focused part because the requirements on information provision for enterprise management are always in place On 12 June 2016, Circular No 53/2006/TT-BTC of Ministry of Finance on “Guiding the application of management accounting in enterprise” was formally issued in order to help the enterprises to conduct the management accounting Most enterprises in Thai Nguyen province, especially small and medium enterprises which were investigated know this Circular which proves that they also study it at certain level In fact, however, a few enterprises did not know this Circular that means a part of SMEs in the province has not paid attention satisfactorily to the first significant document to guide the enterprises to apply management accounting – since management accounting was formed and developed in Vietnam Generally, since its inception to now, management accounting in enterprises was still finding its path, there has not any organization that is enough expertise and experience to consult and develop management accounting system The management accounting system does not have any generally legal regulations in both report form and content Currently, only large enterprises use uniform management software system, and most small and medium enterprises only apply accounting software, therefore they only use information source from financial accounting This is a reason causing the data gathering encounters errors and untimely In fact, the enterprises with internal investment which use accounting information for management purpose are still limited Conclusion The research result from 200 SMEs in Thai Nguyen province shows that the use of management accounting in SMEs is subject to the direct impact of factors in the assumption model: In which, the impact factors are Management support, Strategic vision, Strategic alliance, Inventory labor; Apply quality standard and dependent variable of the use of management accounting in SMEs in Thai Nguyen province In which, the most influential factor is Management support explaining 40.9% of the impact significance to the management accounting use in Thai Nguyen province, Strategic alliance is a following positive impact factor to the model Next is Apply the quality standards positively affects the use of management accounting, inventory labor factor also has positive impact with equal level Meanwhile, the strategic vision factor positively affects the weakest model but regression coefficient is more than 13% At the same time, the analysis result shows that sig of 05 factors are smaller than 0.05, so we can conclude that these factors have statistical significance The model without phenomenon was collinear, variance was changed, linear association and equal variance of the first regression was not infringed, the distribution of the remainder was approximately normal The above factors explained 52.595% of the significance of regression model of the factors affecting the use of management accounting in SMEs in Thai Nguyen province Recommendations The research suggests some solution to enhance the use of management accounting in small and medium – sized enterprise in Thai Nguyen Province To the Government and its relevant departments: The Government and the Ministry of Finance should promptly issue common rules and more specific guidance on the organization of management accounting for businesses, especially that for SMEs After that, they should support enterprises in training and retraining human resources who are capable of researching, implementing and applying management accounting to businesses To SMEs: They must innovate, improve and solve the following problems to survive and thrive in the market economy: They must improve the awareness of the role of management accounting In fact, managers still operate their businesses through their subjective judgment and experience rather than understanding and proper awareness of the importance of management accounting in business management Therefore, they not pro-actively build a suitable management accounting model for their businesses The first thing the administrator should is improving the awareness of management accounting They must improve management organization and technology in production and business, building and perfecting management mechanism, internal control, organization and management structure to ensure the best connection among the parts of the enterprise, providing adequate and timely information for the collection and processing of information for management accounting They must organize their accounting system and divide the work of financial accounting and management accounting reasonably, assigning suitable tasks basing on qualifications and professional competence, retraining accounting personnel to serve management accounting, rapidly developing and improving automatic information processing to meet the requirements of providing timely information for management accounting  ... the World Trade Organization (WTO), a global trade organization The process of integration has a strong impact on the economy in general and businesses as well as SMEs in particular, which has set... all interview method Normally, there are eight basic steps to design one questionnaire as below: (1) Determine required data: based on target and contents of research, to determine specifically... following method:  Analyse reliability with Cronbach’s Alpha coefficient: According to “Hoang Trong and his partners, 2005”, reliability meets requirements when Cronbach’s Alpha ≥ 0,8; Cronbach’s