Improving internal control system of wood processing firms in Binh Dinh

aw materials as well as reasonable prices which are 
consistent with the market prices. Checking the suppier’s selling policies regularly will help 
the company enjoy a variety of financial benefits such as discounts or can change its suppliers 
if they find that the selling policy of this provider is not suitable for the current situation of the 
business. 
Procedures such as making table to analysis aging bucket as well as the elimination of 
bad debt must be approved by the competent authority, which is also applied by most firms. 
This is considered quite important not only for the internal company but also for investors to 
have a clear picture of the enterprise so that they can assess the management of receivables. 
Debt analysis will give businesses an overview of their receivables, their maturity as well as 
their debt collection period, which shows that the firm has a good debt management system. 
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Not only that, it can also help speed up the receivables turnover of the business or in other 
words the time a turnover cycle of receivables of the business will be accelerated. At the same 
time, it also shows that the ability to convert receivables into money will be easy, which meet 
the needs of business expenses. 
Finally, the majority of businesses have a channel of information about the customer’s 
tastes as well as their opinions about the price and quality of commodity. This policy not only 
show that businesses care for the market’s demand but also present that they respect their 
customers. The acquisition of opinions about the prices and quality of their goods will help 
businesses know the market evaluation of their products, base on the that, they can adjust to 
compete with its competiors. In addition, the acquisition of tastes of customers will help 
businesses look further, as well as have orientation to meet the needs of customers timely. 
In summary, through the survey and the analysis, we can see the Revenue cycle is an 
important cycle and virtually wood processing firms in Binh Dinh province have relatively 
good control systems. However, those systems still have limitations and shortcomings. 
Therefore, businesses must take measures to overcome as well as provide better control 
procedures, in accordance with the conditions of each enterprise to achieve business 
efficiency. 
5. Some solutions for improving internal control system at wood processing firms in 
Binh Dinh province 
5.1. Improve the internal control system 
About Control Environment Department: To promulgate in writing the rules and 
regulations on ethical standards for all officials and employees; Businesses need to rebuild an 
organizational structure with departments have its separate functions and rights; rearrange the 
contingent of managers, replace those who do not meet the requirements of morality and 
competency. 
About Risk Assessment Department: Establish acceptable risk levels for activity levels; 
In order to take the initiative in dealing with risks and minimizing losses, firms need to 
strengthen preventive activities rather than corrective actions; Businesses need to look at risk 
in a holistic and systematic way. 
About Control Activities Department: Proper application of the principles of not 
taking charge of for many tasks, assignment, authorization, approval in the design and 
operation of control procedures; Conducting verification of customers’ financial situation 
before selling. 
About Information and Communications Department: Issuing more specific 
documents for each subject, specifying the rights and responsibilities of each individual; 
Establishing information collection channels to collect frauds of employees as well as 
customer’s information and inventory; Information relating to each division must be 
decentralized and transfered to the person who need it; Firms need to build up information 
channels about custormers and suppliers from outside. 
About Monitoring Department: Firms should build a professional and self-aware 
working environment. Need to receive, collect information outside the enterprise; Receive 
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feedback on defects of the internal control system during the seminars, trainings or monthly 
company briefings; Monthly, ask staff to report on the performance of their duties. 
5.2. Main business cycle in the business 
About the Expenditure cycle: Firms need to find a reputable supplier to ensure the 
quality and quantity of input materials; Purchases may only be made upon presentation of an 
authorized purchase order; The assessment of the competency, ethics and experience of the 
staff in the buying – selling department should be paid attention. 
About the Revenue cycle: reasonable commitment on delivery schedule; Receive 
orders in accordance with terms and conditions; Apply policies of selling on credit and 
controlling the credit reasonably; Deliver accurate quantity and type of products to the right 
customers; Fully accounting and policies about selling by cash. 
5.3. Implementation of solutions to improve the internal control system at wood processing 
firms in Binh Dinh 
Recommendations to the Goverment: The Government should stipulate shortly the 
procedures for registering the afforestation and shorten the registration time for firms wishing 
to invest in afforestation. In addition to providing loans for firms planted forests, the 
Government also needs to provide loans to wood processing firms; The government should 
soon establish an international furniture quality testing center in Vietnam; The State should 
enhance the role and functions of the Wood Processing Association. 
Recommendations to firms: develop strategies for sustainable development and 
consistently implement them; Develop a plan to restructure the company, rearrange 
production system effectively; implement new, advanced, suitable and proven management 
methods to replace existing family management methods; Expeditiously invest in renewing 
production technologies in order to reduce costs, lower production costs and raise 
competitiveness; Ensure the harmony of interests among firms, customers and partners; 
delivery high quality goods to customers timely and assure complying with signed contracts; 
Promote activities of research and development. 
6. Conclusion 
Nowadays, with fierce competition in the market, recession pressure and economic 
difficulties, businesses are becoming more and more interested in building an internal control 
system to help the organization reduce damages and operate more efficiently. With some 
solutions to perfect the internal control system for companies in this article, hopefully 
together with the effort and the management of the Board of Directors and the commitment 
and the efforts of the whole employees, the efficiency of the internal control system bring to 
the business is higher. From that, contribute to emproving the efficiency of firms as well as 
the social welfare and promoting the economy. However, due to time constraints, the article 
focuses on researching and finding solutions to complete the internal control system for the 
company on the Expenditure cycle and the Revenue cycle, having not conducted research and 
provide solutions on other cycles of the businesses. 
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Appendix 1: VALUABLES’ AVERAGE VALUES OF FIVE COMPONENTS OF INTERNAL 
CONTROL SYSTEMS IN WOOD PROCESSING FIRMS IN BINH DINH PROVINCE 
N Mean 
Std. 
Deviation 
Std. Error 
Mean 
(1) Control environment 
Issuing documents 35 3.6286 0.80753 0.13650 
Determining rights in the cycle selling - receiving 35 3.4857 1.14716 0.19390 
The Board of Directors have involved in development of 
policies in the business cycle 
35 3.3714 0.94202 0.15923 
Issue measures to prevent damaged products 35 3.8571 0.94380 0.15953 
(2) Risk assessment 
Identify difficulties 35 3.5429 1.03875 0.17558 
Determine the origin of raw materials 35 3.6286 0.94202 0.15923 
Develop a risk identification mechanism from the factor 35 3.0571 0.72529 0.12260 
Evaluate the risks of the cycle selling - receiving 35 3.2857 0.78857 0.13329 
Whether risk management measures are feasible 35 3.4286 0.91670 0.15495 
Machinery and equipment meet the requirements 35 3.3714 1.05957 0.17910 
Product design has quality assurance 35 3.2571 1.33599 0.22582 
(3) Control activities 
The goods are carefully preserved 35 4.1429 1.00419 0.16974 
There is staff turnover 35 2.8857 1.10537 0.18684 
New products increase metarial costs and labor costs 35 3.2286 1.33032 0.22486 
There are measures to detect outdated and damaged product 35 4.0286 0.95442 0.16133 
The product has the right design 35 4.0000 0.97014 0.16398 
Verify the customer's financial situation before selling 35 3.3143 1.15737 0.19563 
(4) Information and communications 
There is a channel for collecting information about employee 
fraud 
35 3.1429 1.06116 0.17937 
There is a channel for collecting information about customer 
tastes 
35 3.8286 1.04278 0.17626 
Customer information is timely transmitted to the departments 35 3.1429 1.11521 0.18851 
Customer information about employee violations is sent to the 
managers 
35 3.2571 0.88593 0.14975 
Set up communication channels for everyone to report fraud 
such as mail, hotline 
35 3.1714 1.09774 0.18555 
Collecting opinions on price and quality of goods 35 3.4571 0.88593 0.14975 
(5) Monitoring 
Head of buying department track the progress 35 3.1714 1.15008 0.19440 
Periodically evaluate competency, ethics and experience of the 
employees 
35 3.3429 1.30481 0.22055 
Complaints from suppliers have been investigated clearly 35 3.4000 1.09006 0.18425 
The internal audit department has orders processing regulations 35 3.4857 1.12122 0.18952 
Firms have evaluated incomplete products at the end of each 
busisness period 
35 3.4286 1.42014 0.24005 
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