Research On Integrating Abc With Other Accounting Methods And Its Applying In Vietnam

Activity-Based Costing (ABC) was introduced in the mid1980s and it has applied very popular in developed countries such as US, UK, Australian, French etc. with obvious advantages. Today more and more developing countries such as China, Thailand, Malaysia, etc., have adopted and implemented it. With rapid change in economic and social environment as high-tech manufacturing and services, network communication, increasingly complex demands of the consumer lead the businesses to face many challenges in the global competition. Although ABC system has more advantages than traditional costing (TDC) system but in the present competitive economic environment it has not met fulfilled provision of sufficient information for planning, control, and decision-making, for example, lack of foreseeing information, lack of discussion about capital costs, and ABC just focuses on actual costs not on target cost or standard cost. How can we overcome the shortcomings that ABC is facing? How can we develop the functions of ABC? It is an important task for this research. In order to contribute more research on ABC and its integration with other accounting methods, this research studies the integration of ABC with other accounting methods to overcome ABC limitations and promote the functions of ABC.This research constructed five integration methods that were:(1) ABC with standard costing integration;(2) ABC with target costing integration;(3) ABC with EVA integration;(4) ABB with ABM integration; and (5) ABC with BSC integration. In each model, ABC is the core.ABC with standard costing integration and ABC with target costing integration provide accurate cost information and better cost control. The ABC with EVA integration model focuses on both operation costs and capital costs at lower level. It gives managers a comprehensive view of the costs used by each activity allocated to products. Under EVA-ABC, managers can accurately assess operating efficiency at all levels of their business. The fourth model, ABB with ABM integration, ABB just emphasizes the planning and control purpose of cost management. It lacks of how to manage organization operating to achieve what ABB drawn. ABM help managers run the actual organization’s operating to reach ABB line. The ABB provides an assessment of the efficiency and effectiveness of an organization. This is because we can compare the actual results with the results-based budgeting activity. Efficiency examines how well the work is done, and effectiveness examines whether or not the right work is being accomplished. These perspectives need the function of ABM. The last model, ABC with BSC integration, the framework of BSC provides four perspectives on performance measurement of an organization. The reliability of data input using for BSC affecting its outcomes. Each BSC perspective includes numerous activities. The analytic results of BSC will more accurate and confident if the organization using ABC method to support BSC.In the practical aspect, the research conducted the surveys on the adoption and implementation of ABC in Vietnamese enterprises. An attempt was made to find the factors affecting ABC adoption and suggests the solutions in order to diffuse single ABC method, and ABC integrating with other accounting methods in Vietnam. The questionnaire and interview methods were employed. The statistical methods were used for analyzing factors. The survey results showed that ABC implementation rate is very low compared with the surveyed results of prior literatures in other countries. The analysis of survey data divided into two groups:(1) group1included Small and Medium Enterprises (SMEs) and (2) group2included large companies. In the group1, there was no SME applied ABC method. In the group2, only eight large companies have implemented ABC methods, the managers of these companies confirmed that ABC method has brought advantages and increased profitability and competitiveness for the companies. This result also supported for the past literatures. However, the major proportion of Vietnamese companies has not applied ABC, especially there was no SMEs implemented this method. Therefore, this research attempted to analyze the factors affecting ABC non-adoption in Vietnamese companies. The22factors related to ABC non-adoption were surveyed in order to find out the reason for this matter. Among22factors, the results of t-test showed that there were significant mean differences of12factors between large companies and SMEs,10factors no significant mean differences (see analyzing in chapter4). The results of this survey revealed the key factor affecting ABC non-adoption in Vietnamese companies is the low quality of accounting human resource. Therefore, this research conducted two surveys:(1) satisfaction of accountant quality, and (2) quality of accounting education in Vietnamese universities. By analyzing the data of two surveys, this research found out the factors affecting accountant quality and accounting education in Vietnam. Then, suggests solutions for innovation of accountant quality and accounting education (refer to chapter5).Based on the research of ABC theory and its integration, and the results of surveys, we suggested the possible solutions for adoption and implementation of ABC method and its integration in Vietnam. These solutions include:(1) Need to change economic characteristics and business management thinking;(2) More emphasize management accounting in Vietnamese accounting system;(3) Innovate accounting higher education and training;(4) Promote accounting research, especially in management accounting;(5) Enhance the role of professional associations in the diffusion and promote application of the ABC system;(6) Training and developing competent accounting human resources.The main innovations of this research include:(1) Research the advantages and limitations of ABC and other accounting methods in order to find the best ways to overcome the shortcomings of theoretical ABC;(2) Constructed five models of ABC with other accounting integration in which ABC is the core;(3) By analyzing the data of the surveys concerned to adoption and non-adoption of ABC in Vietnam, this study reveals the factors obstructing ABC adoption in Vietnamese enterprises and suggests the solution for developing ABC system and ABC integrating with other accounting methods in Vietnam;(4) Based on the results of data analysis, this research suggests possible solutions to diffuse ABC in Vietnam.