Improving financial reporting standards in Vietnam’s public companies: The crucial role of audit committees

Audit committees play a critical role in governance as financial disclosures are scrutinised. This study examines the effects of audit committees on the quality of financial reporting among Vietnamese listed firms, as well as how the efficacy and features of audit committees affect the accuracy, dependability, and transparency of financial reports. The study uses Partial Least Squares Structural Equation Modeling (SmartPLS) to analyse the association between audit committee features and financial report quality using a sample of 259 listed Vietnamese businesses across different industries. This approach was selected due to its capacity to manage complex systems and yield reliable outcomes. The results indicate that better financial report quality is correlated with more substantial audit committee features. In particular, it is thought that maintaining financial reporting accuracy depends heavily on audit committee members’ independence and financial knowledge. Furthermore, audit committee activity, including the frequency of meetings and thoroughness of reviews, enhanced financial reporting transparency significantly. These findings suggest that companies prioritizing robust audit committee structures may experience improved investor confidence and compliance with international reporting standards. This study adds to the expanding body of literature on financial reporting standards and corporate governance, focusing on the context of emerging economies such as Vietnam.