Comparing the Applications of Management Accounting between Vietnamese
Public Universities by the Degree of Autonomy
Oanh Thi Tu LE PhD
�University of Labour and Social Affairs,
Hanoi, Vietnam
E-mail:
[email protected]
Phong Thi Thu Tran
Hanoi Open University,
Vietnam
E-mail: [email protected]
Abstract
This
study was conducted based on a survey of 53 public universities in Vietnam to
evaluate the applications of management accounting in universities according to
the following metrics: (i) Cost classification; (ii) Conducting and evaluating
budgets; (iii) Management responsibility; and (iv) Using information to make
short-term and long-term decisions. The results
showed that public universities have some interest in management accounting
information, especially responsibility accounting. However, management
accounting information which has not been used much in Vietnamese universities
includes controllable and uncontrollable costs and variance analysis between
actual results and estimates. Regarding the degree of autonomy, fully or
partially autonomous universities tend to apply management accounting more than
non-autonomous universities in terms of the cost per student, the fees for
repeat classes, and management responsibility. The research results showed the
need to use management accounting information when universities increase their
autonomy.
� Keywords: � �Management Accounting, Public Universities,
Autonomy, Vietnam. . � �
1. Introduction
The system of public
universities plays an important role in the economics of each country by the
higher education system development. Along with the international integration
trend, higher education is changing rapidly in all ways. University autonomy is
inevitable for the development of education and training. Therefore,
universities in general and public universities in particular need to
constantly improve the quality of training and branding. Public universities
are state-owned training institutions which are funded by the state budget to
establish, finance operations. The activities of public universities must
comply with the principles of authorized state agencies (Vu, 2017).
University
autonomy is the freedom of a higher education institution for its operations
neither the management nor influence of the government
Thus,
by shifting from a state control model to a more autonomous model, public
universities must operate more effectively and efficiently. Management
accounting is one of the effective tools to help university administrators to
have timely, complete and predictive information to support decision making
(Truong, 2010). Management accounting has shifted from providing simple
information to providing information for short-term and long-term
decision-making. Purpose of management accounting is to improve operational
efficiency and profitability by providing information for planning, controlling,
and decision making (Sunarni, 2013).
Vietnam
has overcome many difficulties since 1986, the Innovation time and has
accomplished great achievements of historical significance (Le et al.,
2020). The third and fourth industrial revolutions
have brought not only tremendous opportunities, but also significant
challenges. The 4.0 revolution has brought Vietnam opportunities for
development in all economic, cultural and educational fields. Vietnam's education
in general has achieved the certain achievements and (Le, 2020). The university autonomy is indispensable to fit
the challenges. This process still has many shortcomings that need to be
improved. The paper aims to compare differences in the applications of
management accounting among public universities in Vietnam by the degree of
autonomy.
2. Literature Review
The
applications of management accounting and changes of information regarding the
assignment of autonomy in universities have received attention from many
researchers.
Le (2017) considered management accounting as a tool
for financial autonomy in public universities. The author proposed the
classification of variable costs and fixed costs; identified cost objects
according to training level and training system; assessed the impact of cost
fluctuation on financial performance of the school.
Yasmiza et al.
(2017)
analyzed the role of management accounting in Malaysian public universities.
The research showed that administrators of Malaysian Universities were
interested in the most important types of accounting information including
reports, budgets and strategic management accounting. The research also showed
that teamwork and willingness to take responsibility are the most demanding
skills of accounting in Malaysian public universities.
The research on
management accounting in public universities was investigated current situation
of responsibility accounting in Ugandan public universities (Owino et al.,
2016). The study found that there existed responsibility
accounting systems in public universities in which costs and revenues were
accrued and reported from faculty and from faculty to university management,
the head of the department has the authority to manage their estimates of
budget allocation. However, responsibility accounting which follows the model
of decentralization in public universities is not emphasized. The reporting
system of public university is mainly formal, which affects the use of
information of the Board of Directors to make decisions.
Agasisti & Johnes (2010) investigated the evaluation of efficiency in Italian
universities in the rapid changes of higher education environment in Europe
when the government delegated financial autonomy to universities. Research
results showed that changes in cost structure and technical efficiency reduce
profitability in universities.
Horne & Hu (2008) evaluated the
performance of Australian universities. By estimating the cost-effectiveness of
36 universities in the period of 1995-2002 by random marginal analysis, the
results showed that universities do not work effectively when evaluating the
use of costs. Therefore, it suggested assigning responsibility to individual
managers to have better costs control.
Agasisti & Johnes (2010) evaluated the strategic management accounting in four
major Italian universities in the rapidly changing environment of European
universities from the mid-1980s when the government gave financial autonomy to
universities. This change created challenges for administrators and accounting
systems of universities. The study analyzed and recommended strategic
management accounting for these universities in two aspects of resource
allocation and new training programs.
Cropper & Cook (2010) pointed out that many universities are not satisfied with their cost accounting systems and are seeking ways to change them. As financial
resources of universities become more limited
due to financial autonomy, it is necessary for universities to offset the costs
with the revenue from
training courses
to better manage resources.
Thus, the above studies have shown
the importance of management accounting for universities in the context of the economy movement, the requirements of
implementing autonomy mechanism. Researches have also shown a link between
management accounting information and the application of management accounting
techniques to improve universities performance. To assess if there is a difference in management
accounting by the degree of autonomy has not been
mentioned and this is an urgent issue for
Vietnam while implementing the transition from state management to implement
university autonomy.
3. Methodology
The study was conducted through sending questionnaires via email to 138
universities in Vietnam. The questionnaire was divided into 5 main parts: (i)
Identification of operating costs; (ii) Budgeting activities; (iii) Assessment
of management responsibility; and (iv) Using information in decision making;
(v) Information of public university. The identification of operating costs was
conducted using Yes/ No questions. The remaining questions used 5-point Likert
scale, in which 1 = Strongly disagree and 5 = Strongly agree.
�
Table 1. Autonomy Degree
|
Autonomy
Degree |
N |
% |
|
Non
autonomy |
8 |
15.1% |
|
Semi
autonomy |
29 |
54.7% |
|
Full
autonomy |
16 |
30.2% |
|
Total |
53 |
100% |
Source: Compiled by the
authors based on research results
Regarding
characteristics surveyed public universities (Table 1), the number of
questionnaires sent was 138, and the number of answers received was 53 that are equal to 40% in the response
rate. The number of samples needed to conduct the study is 41 (Nguyen & Nguyen,
2015) at this rate, so the collected sample is
sufficiently reliable to implement the research. Out of 53 surveyed universities, 16 were
fully autonomous (30.2%), 29 were semi-autonomous (54.7%) and 8 universities
were not autonomous. The structure of the surveyed universities is suitable for
analysis because Vietnamese public universities are in the process of becoming
fully autonomous. The number of non-autonomous universities is less than the
number of autonomous.
Table 2. Years
of establishment
|
Years
of establishment |
N |
% |
|
< 10
years |
3 |
5.7% |
|
10 - 20
years |
9 |
17.0% |
|
20 - 50
years |
16 |
30.2% |
|
> 50
years |
25 |
47.2% |
|
Total |
53 |
100% |
Source: Compiled by the authors based on
research results
In terms of
number of years of establishment (Table 2), most of surveyed universities had
been established for over 50 years (25; 47.2%). The next most common group was
universities which had been established for between 20 and 50 years (16;
30.2%). The rest were universities which had been established for less than 20
years. Specific characteristics of Vietnamese public universities established
early, with a long history of establishment and development.
Table 3. Location of university
|
Location |
N |
% |
|
Northern |
30 |
56.6% |
|
Central |
11 |
20.8% |
|
Southern |
12 |
22.6% |
|
Total |
53 |
100% |
Source: Compiled by the
authors based on research results
Regarding
location, the majority universities were located in the North of Vietnam (30;
56.6%). The number of universities located in the Central and the South of
Vietnam were relatively equal (the rates are 20.8% and 22.6% respectively
(Table 3). Regarding region, out of 138 public universities in Vietnam, the
number of universities in the North accounted for 54%; the number of
universities in the Central took up 20% and the number of universities in the
South accounted to 27% (Vu, 2017). The distribution rate
of the sample of 53 public universities surveyed is equivalent to the overall.
4. Research Results
4.1 Cost
Classification�
Identifying the type of cost is always an
important content of management accounting since it is the basis for evaluating
and analyzing the effectiveness of cost control and providing information for
managers to make decisions. Therefore, the survey used the Yes/No questions to
investigate the current situation of cost classification of universities based
on the following classifications: (1) Variable and fixed costs; (2) Direct and
indirect costs per student; (3) Direct and indirect costs per faculty or
department; (4) Cost factor (salary, scholarship, outside services); (5)
Controllable and
uncontrollable costs. The results are shown in Figure 1.
Figure 1. Comparing the cost classificaion
Source: Compiled by the
authors based on research results
According to Figure 1, all
universities had implemented cost classification by factor. However,
non-autonomous universities and partially autonomous universities are more
interested in variable costs and fixed costs, direct and indirect costs (from
50% to 70%) than fully autonomous universities are (40%). In contrast, fully
autonomous universities tend to keep track of controllable and uncontrollable
costs more than the other two groups do (88%).
4.2 Conducting and
Evaluating Budgets
Budgeting is a
mandatory step for public universities to make reports to the government.
Therefore, 100% of public universities make annual budgets for this purpose.
However, from the perspective of management accounting, the cost budgeting is
for the purposes of cost control, comparing actual results with estimates;
evaluating cost budgets by division (faculty, department); analysis of
variances according to price and quantity factors; finding causes of variances
to adjust for future budgeting. The survey used the 5-point Likert scale (from
�Strongly disagree� to �Strongly agree�) and compared mean values, actual
budgeting situation of public universities. The results are shown in Figure 2.
Figure 2. Comparing
budgeting by the degree of autonomy
Source: Compiled by the authors based on
research results
Figure 2 indicates that, in general, partially and fully
autonomous universities tend to implement more budgets than non-autonomous
universities. Specifically, variances between the estimates and actual results
(the entire university, each department) among these 3 groups of universities
are relatively similar, (mean values ranging from 3.4 to 4.12, which correspond
to a score of �agree�). There is a significant difference regarding variance
analysis by factor and cause among 3 groups of universities, in which,
partially and fully autonomous universities had similar results (mean values
ranging from 3.8 to 4.0), non-autonomous universities had the lowest mean
value.
4.3 Management Responsibility
The
management responsibility in public universities refers to the decentralization,
the level of responsibility assigned to each department, the individual in
charge of the department, thereby helping to control operational efficiency. To
find out the difference in the management responsibility by the degree of
autonomy of universities, a comparison of mean values were made. The results
are shown in Figure 3.
Figure 3. Comparing management responsibility�
Source: Compiled
by the authors based on research result
�����������������
The group of non-autonomous universities had lower mean values regarding
the management responsibility (mean values ranging from 2.7 to 3.63) (Figure 3).
Particularly, the assignment of cost responsibility to each department and
individual in charge of each department had not received much attention.
Partially autonomous universities and fully autonomous universities had
relatively similar results. Specifically, partially autonomous universities had
slightly higher mean values, especially regarding the responsibility to service
centers.
Figure 4. Comparing the evaluation criteria
Source: Compiled
by the authors based on research results
Base on criteria used to evaluate performance including
controllable and uncontrollable costs/profits, segment profits, RI, ROI (Figure
4), groups of universities had similar results with mean values of
approximately 3.0. The partially autonomous universities and partially
autonomous universities had higher mean values than non-autonomous
universities. Partially autonomous universities used these criteria the most
(mean from 3.13 to 3.37). Autonomous universities tend to use these criteria
less.
4.4 Information for Decision Making
Regarding the use of management accounting information in making
short-term decisions, 100% of universities� leaders used management accounting
information. The basic information used include breakeven point, class size, cost
per student, implementation of joint training programs, tuition fees for
short-term training courses, wage per teaching hour. A comparison of the use of
information in decision making by the level of autonomy in is shown in Figure
5.
Figure
5. Comparing the use of information in making short-term decisions
Source: Compiled by the authors based on
research results
Universities were relatively consistent when using the information
to make decisions about the breakeven point analysis, wage per teaching hour
and joint training programs (mean values ranging from 3.7 to 4.0, which
correspond to a score of �agree�) (Figure 5). Fully autonomous universities
tend to use management accounting information to make decisions more than the
other two groups. Partially autonomous universities and fully autonomous
universities had similar results. The only significant difference is using
information for making decisions about short-term training courses.
Non-autonomous universities used such information to varying degrees.
Particularly, they used the information to determine the class size joint
training programs more than the other two groups and used the information about
the cost per student and tuition fees of short-term courses less than the other
two groups.
When comparing the
use of information for making long-term decisions such as the balanced
scorecard, activity-based costing or responsibility accounting (Figure 6),
groups of universities had relatively similar results (mean values ranging from
3.5 to 4.1). Responsibility accounting information was used the most, which was
followed by activity-based costing. All groups did not support the balanced
scorecard. Fully and partially autonomous universities used this information
more than non-autonomous universities.
Figure 6. Comparing the use of
information in making long-term decisions
Source: Compiled by the authors based on
research results
5. Discussion and Conclusion
Study on the applications of management
accounting in public universities according to the degree of autonomy reflect
the similarities of universities that they implement cost classification by
factors, make annual budgets, compare the variance between the estimates and
actual results. In addition, the Board of Administrators attaches great
importance to management accounting information to make decisions. However,
three groups of universities also had certain differences, namely:
Regarding cost classification, controllable and uncontrollable costs which are essential in cost control are used more by fully autonomous universities than the other two groups. However,
fully autonomous universities did not pay much attention on cost classifications to
prepare reports for decision making. Namely, variable costs and fixed costs are used to
make decisions regarding additional
options; direct and indirect costs per student serve as a basis for determining breakeven points for training courses, training majors, joint programs; Direct and indirect costs for each department serve as a basis for decision making, cost control for each department, faculty, and unit.
�Regarding budgeting, fully
autonomous and partly autonomous universities pay more attention on variance
analysis by factors and finding the causes than non-autonomous universities.
This limits the provision of appropriate information to find nature of the
differences, responsible individuals or departments to make necessary
adjustments in the next accounting period.
�In terms of management responsibility,
autonomous universities (fully and partially) had similar assessments of
management responsibility. However, they rated the management responsibility
higher than non-autonomous universities. Particularly, fully autonomous
universities had the highest assessment of those management responsibilities,
especially responsibility to service centers, which indicates that the autonomy
requires universities to have efficient use of finances. The results of
performance evaluation criteria are similar. Specifically, fully and partially
autonomous universities used evaluation criteria more than non-autonomous
universities. The assignment of rights and responsibilities will help service
centers improve their performance.
In terms of
the use of relevant information relevant for decision making, fully autonomous
universities tend to provide and use more management accounting information.
This means that management accounting information is more useful to the
administrators when universities shift to the autonomy mechanism.
Non-autonomous universities provide information inconsistently. Regarding
information for making long-term decisions, the balanced scorecard is still a
complex method that had not been used much by universities compared to
responsibility accounting. With the autonomy mechanism, public universities in
Vietnam had paid great attention to responsible accounting information.
The results
reflected characteristics of Vietnam universities in transition from the
state's funded mechanism to autonomy. Although universities need changes to
adapt and improve the effectiveness, employees are no changes and their
thinking still has the influence of the protection mechanism. This change needs
a process. On the other hand, management accounting in universities is still
quite new in Vietnam. Without autonomy, universities are used to providing
information according to the requirements of the state, which is stereotypical.
Therefore, the importance of information in decision making has not been given.
Information on costs, cost classifications, variance analysis on implementation
and budget for the adjustment in the next period, assigning management
responsibilities to each department on costs and revenue, cost-volume-profit
analysis ... have not really been paid attention. When shifting to autonomy,
universities must operate as businesses, self-balancing finance and management
accounting. The comparison of the application of management accounting between
Vietnamese Universities by the degree of autonomy has been different.
Accordingly, fully autonomous universities have focused on applying management
accounting more than partially autonomous ones, while partly autonomous
universities have also applied the management accounting better compared to
non-autonomous universities. This finding indicates the necessity of using
management accounting information when public universities are given autonomy.
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