FACTORS ASSOCIATED WITH THE ADOPTION OF COST ACCOUNTING SYSTEM BY SELECTED TRAVEL AGENCIES IN HANOI, VIETNAM _ A DISSERTATION Presented to the Faculty of the Graduate School Southern Luzon State University, Lucban, Quezon, Philippines in Collaboration with Thai Nguyen University, Socialist Republic of Vietnam _ In Partial Fulfillment of the Requirements for the Degree Doctor of Business Administration _ By DOAN THI QUYNH ANH (ANGEL) December 2013 i APPROVAL SHEET The Dissertation of DOAN THI QUYNH ANH entitled FACTORS ASSOCIATED WITH THE ADOPTION OF COST ACCOUNTING SYSTEM BY SELECTED TRAVEL AGENCIES IN HANOI, VIETNAM Submitted in Partial Fulfilment of the Requirements for the Degree DOCTOR OF BUSINESS ADMINISTRATION A program offered by Southern Luzon State University, Republic of the Philippines in collaboration with Thai Nguyen University, Socialist Republic of Vietnam has been approved by Oral Examination Committee WALBERTO A MACARAAN, EdD Expert EDUARDO T BAGTANG, DBM Expert MELCHOR MELO O PLACINO, PhD Expert ALICE T VALERIO, PhD External Panel CECILIA N GASCON, PhD Chairman Endorsed by: Recommended by: EDWIN P BERNAL, DBA Adviser APOLONIA A ESPINOSA, PhD Dean Accepted in Partial Fulfilment of the Requirements for the Degree Doctor of Business Administration _ Date WALBERTO A MACARAAN, EdD Vice President for Academic Affairs ii CERTIFICATE OF ORIGINALITY This is to certify that the dissertation entitled "THE FACTORS ASSOCIATED TO ADOPTION OF COST ACCOUNTING SYSTEM BY SELECTED TRAVEL AGENCIES IN HANOI, VIETNAM", orally defended/ presented under the DBA Program jointly offered by Southern Luzon State University of the Republic of the Philippines and Thai Nguyen University of the Socialist Republic of Vietnam, embodies the result of original and scholarly work carried out by the undersigned This dissertation does not contain words or ideas taken from published sources or written works by other persons which have been accepted as basis for the award of any degree from other higher education institutions, except where proper referencing and acknowledgement were made DOAN THI QUYNH ANH (ANGEL) Researcher/Candidate Date Orally Defended: 14th, December 2013 iii ACKNOWLEDGMENT The researcher would like to express her heartfelt gratitude to the following: Leaders of Thai Nguyen University in Viet Nam and Southern Luzon State University in the Philippines, who created the best conditions to make her complete the dissertation and the DBA program; Dr Edwin Bernal, who helped her with detailed guidance and instructions to complete her research; Representatives from the Southern Luzon State University and the Thai Nguyen University, as well as the teachers and staff of the ICT and academic affairs office who encouraged and helped her and the members of the class to persevere in completing our dissertations ; The directors and staffs of all enterprises, who have responded to her surveys and for their enthusiastic support and participation For her family, parents, husband, children, and all of her dear friends, as always, her sincerest love and gratitude for the encouragement, understanding and support Doan Thi Quynh Anh - Angel iv DEDICATION This dissertation is wholeheartedly dedicated to my husband’s parents and my mother; my husband Nguyen Huu Hung; and mytwo childrenNguyen Hung Cương and Nguyen Ngoc Quynh Chi I also would like to dedicate my work to the tourism industry in Hanoi DTQA v TABLE OF CONTENTS PAGE TITLE PAGE ……………………………………………………………… i APPROVAL SHEET ……………………………………………………… ii CERTIFICATE OF ORIGINALITY ……………………………………… iii ACKNOWLEDGMENT …………………………………………… …… iv DEDICATION ……………………………………………………………… v TABLE OF CONTENTS ………………………………………………… vi LIST OF TABLES ………………………………………………………… viii LIST OF FIGURES ……………………………………………………… x ABSTRACT ………………………………………………………………… xi CHAPTER I II III INTRODUCTION …………………………………………… Background of the Study ………………………………… Objectives of the Study …………………………………… Hypotheses of the Study …………………………… …… Significance of the Study ………………………………… Scope and Limitation of the Study ……………… ……… Definition of Terms ………………………………………… REVIEW OF LITERATURE ……………………………… 10 Theoretical Framework ………………………………….… 25 Conceptual Framework ………………………………….… 27 METHODOLOGY ………………………………………… 29 Locale of the Study ………………………………………… 29 Research Design …………………………………………… 29 Population, Sample and Sampling Technique … ……… 30 Research Instrument ……………………………………… 30 Data Gathering Procedure ………………………………… 32 Statistical Treatment ……………………… …….…… 32 vi IV V RESULTS AND DISCUSSIONS ………………………… 34 Respondents’ Profile ……………………………………… 34 The Accountants’ and the Managers’ Perception of their Level of Awareness and Understanding, Ease of Use, and Usefulness of Cost Accounting System …………… 36 Factors Significantly Affecting the Attitude of the Accountants and the Managers of Travel Agencies in Adopting a Cost Accounting System …………………… 42 The Accountants’ and the Managers’ Perception of their Level of Awareness and Understanding, Ease of Use, and Usefulness of Cost Accounting System …………… 56 The Accountants’ and the Managers’ Attitude Towards Adherence to the Cost Accounting System in the Management of Costs in Travel Agencies ……………… 62 SUMMARY OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS Summaryof Findings ……………………………………… 66 Conclusions ………………………………………………… 67 Recommendations ………………………………………… 68 REFERENCES ……………………… ………………………………… 70 APPENDICES …………………………………………………………… 72 Appendix A - Survey Questionnaire …………………………… 72 CURRICULUM VITAE …………………………………………………… 76 vii LIST OF TABLES TABLE 3.1 PAGE Factors Affecting the Adoption of the Cost Accounting System………………………………………………………… 31 4.1 Respondents’ Age and Gender ……………………………… 35 4.2 Respondents’ Position and Field of Specialization ……… 36 4.3 Perceived Level of Awareness and Understanding of Cost Accounting System …………………………………………… 38 4.4 Perceived Ease of Use of Cost Accounting System ……… 40 4.5 Perceived Usefulness of Cost Accounting System ……… 42 4.6 Attitude Toward Adherence to Cost Accounting System in Cost Management ………………………………………… 44 Summary of the Respondents’ Perception and Attitude Towards Adoption of Cost Accounting System …………… 46 Relationship between the accountants’ and the managers’ perception of their level of awareness and understanding of cost accounting system and their attitude towards adoption of the same cost accounting system in travel agencies cross tabulation …………………………………… 48 4.9 Chi-Square Tests ……………………………………………… 49 4.10 Relationship between the accountants’ and the managers’ perception of ease of use of cost accounting system and their attitude towards adoption of the same cost accounting system in travel agencies …………………………………… 51 4.11 Chi-Square Tests ……………………………………………… 52 4.12 Relationship between the accountants’ and the managers’ perception of usefulness of cost accounting system and their attitude towards adoption of the same cost accounting system in travel agencies …………………………………… 53 Chi-Square Tests ……………………………………………… 54 4.7 4.8 4.13 viii TABLE 4.14 PAGE Relationship between the accountants’ and the managers’ perception of their level of awareness and understanding, ease of use, and usefulness of cost accounting system and their attitude towards adoption of the same cost accounting system in travel agencies ……………………… 55 4.15 Chi-Square Tests ……………………………………………… 56 4.16 Independent Samples Test(The accountants’ and the managers’ perception of their level of awareness and understanding of the cost accounting system in travel agencies)……………………………………………………… 57 Independent Samples Test(The accountants’ and the managers’ perception of ease of use of the cost accounting system in travel agencies)……………………… 59 Independent Samples Test (The accountants’ and the managers’ perception of perceived usefulness of the cost accounting system in travel agencies)……………………… 60 Independent Samples Test (The difference between the accountants’ and the managers’ attitude towards adherence to the cost accounting system in the management of costs in travel agencies) ………………… 63 4.17 4.18 4.19 ix LIST OF FIGURES FIGURE PAGE Theory of Reasoned Action from Davis, Bagozzi&Warshaw (1989) …………………………………………………………… 22 Theory of Planned Behavior (Ajzen, 1985) ………………… 23 Technology Acceptance Model from Davis, Bagozzi &Warshaw (1989) ………………………………………………… 24 Classification of Cost in Travel Business …………………… 27 Cost Accounting System Adoption Factors ………………… 28 x 62 relationships are weak and the competency of the accountant is not fully maximized Understandably, any accountant’s advice that will not translate in increasing revenues, controlling costs, maximizing profitability, or a combination of any of these, will not warrant an easy approval by the management Accountant therefore must rise above being cost accountant into becoming a management accountant, as well c Ineffective cost accounting system Cost system must necessarily fit the requirement of the travel agency As travel agency is uniquely run differently from other service businesses, it cannot adopt a system that fits all As earlier mentioned, the basic requirement for the cost system is to be able to determine the cost of products and services in a travel agency because their prices depend largely on the relevant costs The implementation of a firm’s policy on cost allocations requires a great deal of rationalization so as not to overburden one product/service while others overburdened with unnecessary costs This, therefore, requires the identification and the use of appropriate cost driver to achieved full rationalization of the system Further, to achieve comparative and competitive advantages, it is necessary that, costs associated with the implementation of activities along the value chains in each major business function should be analyzed to emphasize value adding activities that contribute to the achievement of the value expectations from the clients When such is not achieved, then cost accounting system will just generate an ordinary report which will not have much value in furthering the cause of the organization Hence, usefulness is limited particularly for those that have limited appreciation of its potential and actual relevance 63 4.5 The Accountants’ and the Managers’ Attitude Towards Adherence to the Cost Accounting System in the Management of Costs in Travel Agencies The difference between the accountants’ and the managers’ attitude towards adherence to the cost accounting system in the management of costs in travel agencies was tested using the 3rd hypothesis, to wit: Hypothesis 3: There is no difference between the accountants’ and the managers’ attitude towards adherence to the cost accounting system in the management of costs in travel agencies H0: There is no difference between the accountants’ and the managers’ attitude toward adherence to the cost accounting system in travel agencies H1: There is a differencebetween the accountants’ and the managers’ t-test for Equality of Means mahoa Equal variances _atu assumed t df Sig (2tailed) Mean Difference Std Error Difference -2.973 102 004 -.26745 08995 attitude toward adherence to the cost accounting system in travel agencies 64 Equal variances not assumed -2.736 58.543 008 -.26745 09774 Table 4.19 Independent Samples Test According to the T- test analysis result, the value of assumption is < 0.05 (Sig = 004), therefore, there is a difference between the accountants’ and the managers’ attitude toward use of the cost accounting system in travel agencies This finding is consistent with the previous one which says, there is a difference between the accountants’ and the managers’ perception of the usefulness of cost accounting system Since for the managers, usefulness is not as strong, it follows that their attitude towards adherence to the system is not also that strong In the absence of the managers’ strong positive attitude towards the system, the accounts will have to struggle against ensuring that the accounting system is a useful component of the whole management information system so that its relevance and usefulness can be optimized 65 Chapter V SUMMARY OF FINDINGS, CONCLUSIONS,AND RECOMMENDATIONS This chapter presents the summary of the research findings, the conclusion arrived at and the recommendations where the researcher would like to see some concrete outcomes in how the travel agencies manage and implement their cost accounting systems This research on the factors affecting the adoption of cost accounting system in selected travel agencies in Hanoi was conducted in Hanoi City by employing co relational research design utilizing some data gathered from 104 respondents consisting of accountants and managers employed in various Hanoi-basedtravel agencies research questions: It provided answers to the following (1) What is the profile of the respondents in terms of gender, age, position and field of specialization? (2) What is the accountants’ and the managers’ perception of their level of awareness and understanding, ease of use, and usefulness of cost accounting system? (3) What factors are 66 significantly affecting the attitude of the accountants and the managers of travel agencies in adopting a cost accounting system? (4) Is there any difference in the accountants’ and the managers’ perception of their level of awareness and understanding, ease of use, and usefulness of cost accounting system? (5) Is there any difference between the accountants’ and the managers’ attitude towards adherence to the cost accounting system in the management of costs in travel agencies? Summary of Findings The research findings can be summarized as follows: The respondents were generally female while 80% of them were under 40 years old Sixty four percent (64%) of the respondents were accountants; 36%, managers Majority have solid background in either business or accounting The accountants and the managers have high perception of their level of awareness and understanding of cost accounting system Both the accountants and the managers highly agreed on their positive perception regarding ease of use and of the usefulness cost accounting system The accountants’ and managers’ attitude towards adherence to cost accounting system in cost management was high The factors that significantly affect the accountants’ and the managers’ attitude towards adoption of cost accounting system are: a Attitude towards adherence to cost accounting system; 67 b Awareness and understanding of the system; c Ease of use of the system; and d Usefulness of the system There exists a high positive correlation between the accountants’ and the managers’ perception of their level of awareness and understanding of cost accounting system and their attitude towards adoption of the same cost accounting system in travel agencies There exists a high positive correlation between the accountants’ and the managers’ perception of the ease of use of cost accounting system and their attitude towards adoption of the same cost accounting system in travel agencies There exists a high positive correlation between the accountants’ and the managers’ perception of the usefulness of cost accounting system and their attitude towards adoption of the same cost accounting system in travel agencies There is a difference between the accountants’ and the managers’ perception of their level of awareness and understanding of the cost accounting system in travel agencies 10 There is no difference between the accountants’ and the managers’ perception of ease of use of the cost accounting system in travel agencies 11 There is adifference between the accountants’ and the managers’ perception of the usefulness of the cost accounting system in travel agencies 68 12 There is a difference between the accountants’ and the managers’ attitude toward use of the cost accounting system in travel agencies Conclusions The overall objective of the study was to determine the factors that significantly affected the adoption of cost accounting system in selected travel agencies in Hanoi Based on research findings, it was ascertained and concluded that (a) attitude towards adherence to cost accounting system; (b) awareness and understanding of the system; (c) ease of use of the system; and (d) usefulness of the system are the factors that significantly affect the adoption of cost accounting system Recommendations Considering the noted weaknesses in the present-day implementation and adoption of cost accounting system and the inherent benefits of effective and efficient management of the system can bring to the travel agencies, the following recommendations are hereby stated: Travel agencies should expand the role of their accountants from merely record keepers and processors of supporting documents to financial and business advisors Re-tool the accountants in the use of international financial reporting standards that fit the requirement of the travel agencies Enhance the competencies of the managers by providing them adequate knowledge and skills in using financial information in making 69 informed decisions Re-tooling the managers on financial management may come in the form of formal and informal trainings Appraise the cost accounting system that the travel agencies are adopting The cost accounting system must fit the requirements of the particular travel agency It cannot be a system that fits all as each travel agency can be unique in its own way The appraisal should proceed to a formulation and implementation of a more appropriate system for the travel agency It is also recommended that further research be conducted to include studies on: a The level of accountants’ appreciation of their role as financial and business advisors; b The effectiveness of cost accounting system in the hospitality industry in Hanoi; and c The extent of use of management accounting in travel agencies in Hanoi 70 REFERENCES Accounting Law (2003) Administration of Tourism (2012), Report on tour in 2012, Hanoi Ahmed Riahi-Bekaoui(2002), Behavioral management accounting, Wiley Publishing, Inc Ajzen,I.,&Fishbein,M.,1980,Understandingattitudesandpredictingsocial behavior, EnglewoodCliffs,NJ: Prentice-Hall Ajzen, I., 1991, “The Theory of Planned Behavior, Organizational Behavior and Human,” Decision Processes, vol 50, pp 179-211 Dang Van Thanh, Xuan Tien Doan (1998), Corporate Governance Accounting, Finance Publishing House, Hanoi Davis and Hamilton, 1993 G.B Davis and S Hamilton, Managing information: How information systems impact organizational strategy, Business One Irwin, Homewood, IL (1993) Davis, F.D., 1989 Perceived usefulness, perceived ease of use, and user acceptance of information technology MIS Quarterly 13 (3), 319–342 Fishbein, M., and Ajzen, L., 1975, Belief, Attitude, Intention, and Behavior: An Introduction to Theory and Research, Addison-Wesley, Massachusetts Garrison& Noreen(2008), Solutions manual Managerial Accounting, Oxford OX2 8DP Giang Nguyen Phu (2009), International Accounting, Finance Publishing House, Hanoi Hilton(1997), Management Accounting, McGraw-Hill, USA "Information and data", Journal of Travel Vietnam (2012), (1), p 16th Internal documents JSC Vietnam Tourism, Long Duong Co., investment companies, and commercial services Thang Loi Nguyen Co., Ltd Nguyen Phuong Lien (2006), Guide to the regime of corporate accounting, Finance Publishing House, Hanoi Nguyen Tan Binh (2004), Analysis of Financial Management, Statistical Publishing House, Hanoi 71 Nguyen Van Cong (2007), Business Accounting, Publishing House National Economic University, Hanoi Phan Duc Dung (2007), American Accounting, Statistical Publishing House, Hanoi Pham Huy Guess (2006), A Practical Guide Business Accounting, Finance Publishing House, Hanoi Phạm Thị Kim Vân(2002) ,Organization of cost accounting management and business results in the travel business, Economics doctoral dissertation, Academy of financial Ray.H.Garrisin (1993), Management Accounting, University of Economics Ho Chi Minh City School of Accounting and Finance University of Hanoi (1999), Financial Accounting, Finance Publishing House, Hanoi Steven M.Bragg(2009), Management Accounting Best practices, John Wiley&Sons,Inc Thach Ha Xuan (2002), A Practical Guide accounting and business services, Statistical Publishing House, Hanoi T Yu-Hui, C Chia-Ping, C Chia-Ren (2007) Unmet adoption expectation as the key to e-market place failure: a case of Taiwan's steel industry, Industrial Marketing Management 36 (8) (2007) Vo Thi Thang (2000), "Creating positive change, sustainable tourism in Vietnam to step into the 21st century," Vietnam Tourism, (1), L Vo Van Nhi (2005), A Practical Guide to current accounting regime, Finance Publishing House, Hanoi Website: http://www.tapchiketoan.com World Bank (2002), The International Accounting Standards, National Political Publishing House, Hanoi "Yearbook Conference deployment of culture, sports and tourism in 2008 ', Statistical Publishing House, Hanoi 72 Appendix A Survey Questionnaire The Factors Affecting the Adoption of Cost Accounting Management System in Selected Travel Agencies in Hanoi, Vietnam Dear Respondents, I am a graduate student of Southern Luzon State University I am conducting a research entitled: “The Factors Affecting the Adoption of Cost Accounting System in Selected Travel Agencies In Hanoi, Vietnam” as a partial fulfillment of the graduation requirements for the degree in Doctor of Business Administration program at Southern Luzon State University, Philippines The purpose of this research is to identify what factors affectthe adoption of cost accounting system in selected travel agencies in Hanoi Your responses to the questions below will certainly be valuable contributions to the outcome of this research Kindly spend a little of your time in completing this survey questionnaire All information that you will provide shall be treated with utmost confidentiality and will only be used for purpose of this research Should you have some clarifications, please feel free to contact me via my email address: quynhanh_ulsa@yahoo.com Doan Thi Quynh Anh - Angel Doctoral Business Administration program Southern LuzonStateUniversity 73 PART I: GENERAL INFORMATION This section covers personal information Please tick the corresponding squares Gender Male Female Age Under 30 From 30 to 39 From 40 to 50 Manager Tourist guide Over 50 Profession Accountant Other _ Undergraduate Major Business or related Travel or related Accounting or related Other _ How long have you been working in your company? Less than year From to Over to More than Does your company adopt an established cost accounting system? Yes No Does your company have a manual of cost accounting system? Yes No Had you, in the past, ever use or complied with the requirements of your company’s cost accounting system? Never A few times Often Quite a lot PART II: ADOPTION OF COST ACCOUNTING SYSTEM This section includes items concerning your attitude towards the application of cost accounting system in your company Please encircle the numbers corresponding to your degree of agreement with each item The rating 74 scale follows: “1”= Strongly agree; “2”= Agree; “3”= Neither Agree nor Disagree; “4”= Disagree; “5” = Strongly disagree Perceived level of awareness and understanding of cost accounting management system I have a personal knowledge of cost accounting system in the enterprise where I am employed I have been applying the cost accounting management system in performing my job I can easily determine the exact cost due to my consistent application of the accounting management system I feel confident of what I am doing because of my consistent application of the accounting management system in my work I can easily learn to use the cost accounting management system I can easily access information from support unit whenever these are needed to ensure that cost accounting management system works I can easily interact with information support unit for cost management information system I can easily monitor the movements in cost information I think the information support unit is helpful in facilitating the management of cost I think access to cost accounting information and the feeding of information to the management come very handily The cost accounting system affects my work The use of cost accounting system makes me efficient in my work The use of cost accounting system improves my work The use of cost accounting system increases my work productivity The application of the cost accounting system is suitable in travel agencies The application of the cost accounting system reduces the operating cost Perceived ease of use of cost accounting management system Perceived usefulness of cost accounting management system 75 The application of the cost accounting system ensures that the data are secured I like the idea of formally using the cost accounting management system in cost management I think that the formal use of cost accounting management system in travel agencies has some financial and nonmonetary benefits I feel confident that cost information are reasonably accurate when using the cost accounting management system for travel agencies I shall always be ready to use a formal cost accounting management system I shall readily recommend to the manager the use of formal cost accounting management system in cost management I shall readily cooperate with other departments in implementing a formal cost accounting management system in cost management Attitude toward use of cost accounting management system in cost management PART III: COMMENTS & SUGGESTIONS Kindly state briefly and concisely your suggestions relative to the use and application of formal cost accounting system in travel agencies operating in Hanoi, Vietnam ……………………………………………………………………………………… ……………………………………………………………………………………… ……………………………………………………………………………………… Thank you very much for your help and cooperation! 76 CURRICULUM VITAE I Personal Information Full Name: DOAN THI QUYNH ANH English Name: Angel Sex: Female Date of Birth: January 05th, 1981 Place of Birth: Quang Ninh, Vietnam Nationality Vietnamese Contact Address No 3, 176 Alley, De La Thanh street, Dong Da Dístrict, Hanoi, Vietnam Quynhanh_ulsa@yahoo.com II Educational Qualification Years Institution Degree 1998-2002 The National Economic University Bachelor of Economic 1999 - 2003 Hanoi University of Language Bachelor of English 2006 – 2010 Swinburne University of Technology Master of International Accounting III Working History Years Organization Position 2003-2007 University of Labour and Social Affair Lecture of Accounting 2007-2013 University of Labour and Social Affair Deputy of Accounting Management Department 2013 – Now University of Labour and Social Affair Deputy of Education Testing and Accreditation Department ... Classification of Cost in Travel Business …………………… 27 Cost Accounting System Adoption Factors ………………… 28 x ABSTRACT Title of Research : FACTORS ASSOCIATED WITH THE ADOPTION OF COST ACCOUNTING SYSTEM BY SELECTED. .. understanding, ease of use, and the usefulness of the cost accounting system It further examined their attitude towards adoption of cost accounting system for effective management of costs in travel agencies. .. system The ease of use of cost accounting system may refer to the ability of accountants and managers in using the cost accounting system Level of awareness and understanding of cost accounting system