5 ACCOUNTING FOR PAYROLL AND PAYROLL RELATED COMPENSATION AT THE SINGLE MEMBER XUAN HOA PACKAGING LIMITED LIABILITY COMPANY

MINISTRY OF FINANCE ACADEMY OF FINANCE - STUDENT: NGUYEN QUYNH DIEP CLASS: CQ54/21CL.02 GRADUATION THESIS TOPIC: ACCOUNTING FOR PAYROLL AND PAYROLL-RELATED COMPENSATION AT THE SINGLE-MEMBER XUAN HOA PACKAGING LIMITED LIABILITY COMPANY Major: Accounting Code: 21 Mentor : MSc Nguyen Thu Hao Ha Noi – 2020 Academy of Finance Graduation Thesis STATEMENT OF ORIGINAL AUTHORSHIP I assure that this is my own research work, the result data stated in the graduation thesis are honest and come from the actual situation of the singlemember Xuan Hoa Packaging Limited Liability Company Student Nguyễn Quỳnh Diệp STUDENT: Nguyen Quynh Diep Class: CQ54/21CL02 Academy of Finance Graduation Thesis ACKNOWLEDGEMENTS Firstly, I am deeply indebted to my supervisor MSc Nguyen Thu Hao whose help, stimulation suggestions and encouragement helped me all the time of research for and writing of this thesis I also want to thank Xuan Hoa Packaging Co., Ltd for giving me permission to commence this thesis in the first instance, to the necessary research work and to use departmental data I have furthermore to thank the Chief Accountants as well as all others staffs at Xuan Hoa Packaging Co., Ltd who gave and confirmed this permission and encouraged me to go ahead with my thesis My friends in the Academy of Finance also supported me with my thesis I would like to thank them for all their help, support, interest and valuable hints Especially, I would like to give my special thanks to my family whose patient love enables me to complete this progress of research Finally, because of limitation of time and knowledge, mistakes are unavoidable, so I wish to have more opportunities, I also wish to receive more contribution and suggestions to make my thesis better STUDENT: Nguyen Quynh Diep Class: CQ54/21CL02 Academy of Finance Graduation Thesis TABLE OF CONTENTS STATEMENT OF ORIGINAL AUTHORSHIP .i ACKNOWLEDGEMENTS ii TABLE OF CONTENTS .iii LIST OF ABBREVIATIONS vi LIST OF DIAGRAMS vii LIST OF TABLES viii LIST OF IMAGES ix INTRODUCTION CHAPTER 1: GENERAL THEORY ON PAYROLL AND PAYROLLRELATED COMPENSATION .5 1.1 Importance of accounting for payroll and payroll related compensation 1.1.1 Definition .5 1.1.2 Characteristic of payroll and payroll-related compensation 1.1.3.Management’s responsibility for payroll and pay-roll related compensation 1.1.4.Importance of payroll and payroll-related compensation .10 1.1.5.Payroll regime .11 1.2 Calculation of payroll and payroll-related compensation 13 1.2.1 Time-based salary system 13 1.2.2 Job-based wages system 15 1.3.Accounting for payroll and payroll related compensation in company 17 1.3.1.Classification of payroll and payroll related compensation 17 1.3.2.Gathering information of salary and payroll related compensation .19 1.3.3.Accounting for payroll and payroll-related compensation 20 STUDENT: Nguyen Quynh Diep Class: CQ54/21CL02 Academy of Finance Graduation Thesis 1.3.4.Accounting for payroll and payroll related compensation in application with accounting software .27 1.3.5.Presentation in financial statement: 28 CHAPTER 2: ACCOUNTING FOR PAYROLL AND PAYROLL RELATED COMPENSATION IN XUAN HOA PACKAGING SINGLE-MEMBER LIMITED LIABILITY COMPANY (Xuan Hoa Packaging Co., Ltd) 31 2.1 Overview of Xuan Hoa Packaging Co., Ltd 31 2.1.1 Establishment and development of Xuan Hoa Packaging Co., Ltd .31 2.1.2 Organization of Xuan Hoa Packaging Co., Ltd 32 2.1.3 Accounting department in Xuan Hoa Packaging Co., Ltd 36 2.2 Accounting for payroll and payroll-related compensation in Xuan Hoa Packaging Co., Ltd 39 2.2.1 Accounting for payroll and payroll-related compensation in Xuan Hoa Packaging Co., Ltd 39 2.3.Actual situation of organizing salary accounting and payroll compensation at Xuan Hoa Packaging Co., Ltd 42 2.3.1.Actual situation of accounting for payroll and payroll-related compensation at Xuan Hoa Packaging Co., Ltd 42 2.3.2.Accounting books used in accounting for payroll and payroll related compensation in application with accounting software 76 2.3.3.Process of transferring, printing accounting books and financial statements 83 2.4.Comment on accounting for payroll and payroll related compensation in company Xuan Hoa Packaging Co., Ltd .90 2.4.1.General comments on accounting work at the Company .90 2.4.2.Comments on the accounting for payroll and payroll-related compensation in Xuan Hoa Packaging Co., Ltd 91 STUDENT: Nguyen Quynh Diep Class: CQ54/21CL02 Academy of Finance Graduation Thesis CHAPTER 3: RECOMENDATION TO IMPROVE ACCOUNTING FOR PAYROLL AND PAYROLL RELATED COMPENSATIONS IN XUAN HOA PACKAGING CO., LTD .95 3.1 The needs of improvements .95 3.2 Some suggestions for improvement of accounting for payroll and payroll related compensation in Xuan Hoa Packaging Co., Ltd 96 CONCLUSION 102 REFERENCES 103 STUDENT: Nguyen Quynh Diep Class: CQ54/21CL02 Academy of Finance Graduation Thesis LIST OF ABBREVIATIONS SI HI UI PIT Dr Cr STUDENT: Nguyen Quynh Diep Social Insurance Health Insurance Unemployment Insurance Personal Income Tax Debit Credit Class: CQ54/21CL02 Academy of Finance Graduation Thesis LIST OF DIAGRAMS Diagram 1: The main accounting process of the salary of the employee 23 Diagram 2: The main accounting process of payroll related compensation .26 Diagram 4: Production process .36 Diagram 5: diagram of accounting department .38 Diagram 6: Diagram of accounting in the form of General Journal: 40 STUDENT: Nguyen Quynh Diep Class: CQ54/21CL02 Academy of Finance Graduation Thesis LIST OF TABLES Table 1.1: Percentage of salary deductions prescribed by law Table 2.1: Department division .43 Table 2.2: Timesheets 49 Table 2.3: Percentage of payroll-related compensation 52 Table 2.4: Payroll calculation of the accounting department 54 Table 2.5: Payroll calculation sheet of printing department 56 Table 2.6: Tax progressive table 58 Table 2.7:Allocation of total salary into account the costs related 63 Table 2.8: Allocation table of payroll-compensation 68 Table 2.9: Allocation table of payroll and payroll-related compensation .69 Table 2.10: General Journal 84 Table 2.11: Extract from Ledger 87 Table 2.12: Extract from subsidiary ledger of 3383 88 STUDENT: Nguyen Quynh Diep Class: CQ54/21CL02 Academy of Finance Graduation Thesis LIST OF IMAGES Image 2.1 Payment voucher 65 Image 2.2 Accounting software screen interface 'Fast Accounting' 78 Image 2.3 Input screen of accounting sheet 80 Image 2.4 Payment voucher 81 Image 2.5 Input screen 83 Image 2.6 Layout view and print financial statements 90 STUDENT: Nguyen Quynh Diep Class: CQ54/21CL02 attention to quality and labor productivity For instance, the selling department’s payment is calculated by time-based salary The company is currently recording the salesperson's salary in account 642, the account used to record the general and administrative expense The company is applying the Saturday-wage rate as other days of the week will create injustice in salary calculation CHAPTER 3: RECOMENDATION TO IMPROVE ACCOUNTING FOR PAYROLL AND PAYROLL RELATED COMPENSATIONS IN XUAN HOA PACKAGING CO., LTD 3.1 The needs of improvements In a market economy where labor is regarded as a commodity, the determination of its value is of utmost importance not only for workers and employers but also for the whole society For continuous production, workers must reproduce their labor Wages paid by enterprises to employees are used to offset the labor they spend On the other hand, wages also stimulate to ensure that when workers work effectively and have high productivity, the salary will increase and vice versa Every business enterprise wishes to receive the necessary information for its production and business activities If any enterprise fully captures the necessary information, it is also possible to create opportunities to promote the initiative in production and business and achieve high efficiency To survive and develop, businesses need to create good products and reasonable prices to create their competitive advantage To this, businesses have no other way to minimize production costs, thereby increasing profits for businesses Accounting is one of the important tools of the economic management system, which is the driving force for businesses to develop more and more effectively Therefore, improving accounting is the top and necessary goal for the business The information which accountants provide about payroll and payrollrelated plays an important position in the financial and economic system because it is an integral part of production and business costs In addition, accounting of payroll and payroll-related compensation also helps to improve production organization, labor organization to improve labor productivity Therefore, the calculation of salary distribution and deductions based on salary must be properly and fully calculated on the salary regime and timely payment Each enterprise has a different form, concept, manner, then all businesses want a way to calculate, pay, record wages and salary deductions in accordance with production characteristics in the company Therefore, due to the economic change, due to the characteristics of production and business, salaries and deductions, there are also shortcomings that managers have been trying and trying to overcome These shortcomings are to improve the accounting of wages and salary deductions of their businesses Accounting payroll and payroll-related compensation from the right salary will help business accounting of the business go into order, reducing unnecessary expenses It also allows businesses to properly determine production costs and business costs From that, determine the right income of the enterprise, in addition to helping businesses balance the costs and results to increase economic efficiency to help businesses fulfill their obligations to the State, with relevant departments So as to ensure payment of full and accurate salary increases income for workers and businesses Xuan Hoa Packaging Co., Ltd is one of the businesses that have innovated in the course of production and business in many special fields, especially in the manufacturing sector With the renewal of the market economy, the company has reorganized its management apparatus, improved the production and business process and at the same time reorganized the accounting apparatus of the business 3.2 Some suggestions for improvement of accounting for payroll and payroll related compensation in Xuan Hoa Packaging Co., Ltd Workers will work with mind at ease when they know they are paid reasonably A good salary policy can attract talented employees to the company as well as motivate their creative ability From that fact, combine my knowledge achieved from my university and my practicing period in Xuan Hoa Packaging Co., Ltd I bravely put forwards some solutions to the weaknesses of accounting for salary and salary deductions as follow: Solution 1: In order to controlling the actual working day, the company needs to develop measures to control the actual number of working hours in the day Obviously, the company needs to invest in equipping the system with automatic fingerprint or swipe card time attendance system to perform the daily timekeeping for employees Timesheets or timecards should be signed by the employee, then reviewed, approved and signed by a supervisor when applicable Always have a supervisor approve hours worked by employees, to prevent employees from charging more time than they actually worked Time off or unpaid absences should be reflected on the appropriate time sheet Approve overtime before the fact In addition, an employee should not have access to his time sheet once a supervisor has approved and signed the record for the payroll preparer Apply similarly with overtime worked verification Even if you not require supervisors to approve the hours worked by employees, at least have supervisors approve overtime hours worked There is a pay premium associated with these hours, so the cost to the company is higher, as is the temptation for employees to claim them In addition, setting up more CCTV or cameras around to put everyone’s work under control Solution 2: Vietnam is gradually shifting from a cash economy to a form of banking payment that is both civilized and modern, ensuring safety and confidentiality In this context, businesses, especially large ones, should quickly seize the opportunity, use payroll payment solutions to reduce the work burden for employees, thereby increasing efficiency for the result of using human resources for enterprises With such a large amount of money, it is easy to cause confusion, errors and loss in the payment process for employees In order to avoid the inconvenience for payroll accountant or cashier pays cash to each department and each employee The company must combine with the Bank to open a separate account for each employee Salary payment service through account is a banking service provided to enterprises to pay salaries, allowances and other incomes (if any) to officials and employees through payment accounts provided by enterprises Opening at the Bank, based on the list of staff proposed to be paid by the enterprise via the bank Solution 3: Salary accountants should open the tracking details book for each item for Account 334 and Account 338 leading to difficulties in tracking and comparing data with other related accounting books Solution 4: The company should regularly analyze labor and salary, directing the unified construction of the salary unit of product weight at the factory to closely observe the actual situation In order to promote the capabilities of workers, encourage employees to work On the other hand, the company needs to rebuild its payroll to differentiate between the groups with different professional qualifications in direct workers, need to consider more other criteria specifically and avoid heavy in qualitative terms like the Company's current payroll policy Based on employee contribution level: The contribution level is determined based on the evaluation of the ability to contribute or actually contribute to the unit It should be noted that competence is only a factor to assess employee contribution, not a sole basis Based on the labor market: the units have the same conditions to set up a wage policy so that it is relatively fair with other units Based on the fairness between employees in the same department and between departments in the same unit For example, the Sales department should both receives salary over time and wages according to sales when the turnover exceeds a prescribed level This form of payment is intended to encourage workers to work hard, because they will have higher incomes, they will make more efforts Solution 5: The company records all salaries for employees from the indirect departments into the account 642 (General and administrative expense) It is not reasonable according to the principle of accounting, the salaries of the sales staff should be recorded in Account 641 - Selling expenses Solution 6: The company should set its own support policy for weekends Especially on the Saturday-work Solution 7: Company need to shift the labor arrangement in the block department to reasonable, according to practical requirements of production Assigning specific tasks in accordance with the working capacity of officials and employees, avoiding labor waste on wages Solution 8: Raising staff income In this period, the salary of staffs in the company is not high So, the company needs to increase wages for employees to ensure a reproducible labor in the environment of the company profitable or less profitable The determination of the company's profit is always made after the determination of salary fund paid to employees To achieve this, the company needs to take measures increasing the salary fund company that is growing wage raise, increase the income of workers as follows: Expanding the scale of production, increase the number of finished products in the industry; Improving product structure, the company needs to carefully study the finished products that they supply to meet the increasing market demand; Improving the quality of each product, reduce waste, determine the suitable price This is a vital task for the quality of the company is increasingly enhanced; exploiting all the available potentials of the company, promoting the advantages of business characteristics, machinery and equipment, capacity of management organization, development of professional production combined with general business to increase revenue for the company; Applying new scientific and technological achievements to reduce living labor, to conduct joint ventures to make full use of scientific and technological advances for production and business and expand the scope of partners in the market.; Improving the living standards of employees, effectively leverage the salary, distribute internal salary funds to ensure both stimulate development and ensure equity in the company Solution 9: Setting up a suitable bonus system Rewards are significant, it is a direct force to help workers increase labor productivity and bring about high economic efficiency On the other hand, the company needs to rebuild its payroll to differentiate between the groups with different professional qualifications in direct workers, need to consider more other criteria specifically and avoid heavy in qualitative terms like the Company's current payroll policy Solution 10: The payroll policy of the state changes annually Therefore, timely update of the State's policies and regimes on accounting, as well as the Finance regime, the regime on labor, wages and social insurance is really important mission to payroll accountant Solution 11: The Board of Directors of the company needs to continue researching, and at the same time organize discussions, internal meetings to make and unify the appropriate salary and bonus regime Solution 12: Companies should run payroll variance analyses on a monthly basis, based on disaggregated data by department, function center, or division These analyses should be run against the budget and prior year, and changes outside expectations should be investigated Solution 13: Improving the skill level for laborers, first of all to classify laborers based on work requirements and production orientations, and plan to improve professional skills for employees of the company With a low level of skill, the company should train by sending staff to study more, invest funds the company has administrative measures to consciously carry out internal regulations Establish a rigorous quality control and quantity control system to make the right decisions for short-term contract workers, ensuring the labor market is plentiful in our country Solution 14: About labor management: The recruitment of employees should be widely informed on the mass media In addition, the recruitment of employees should be made more closely and timely notify the rights of employees when working at the Company To ensure fairness for the test subjects In doing so, the Company can recruit really high-qualified people to always act as an internal source of development for the company Solution 15: About labor common issue A large proportion of workers have not been trained in industrial labor discipline The majority of workers come from rural areas, agriculture, bearing heavy production style of a small-scale agriculture, arbitrarily in terms of time and behavior Workers are not equipped with the knowledge and skills to work in a team, unable to cooperate and bear risks, afraid to promote initiative and share work experience Unskilled labor, besides many people who have not yet been able to find a job, therefore, jobs that not require intensive work, complex labor, need to be strengthened than seasonal contracts and jobs to reduce expenses for social insurance, health insurance, trade union fees included in business expenses CONCLUSION In order to become an effective tool, the accounting organization in general and especially the organization of "payroll and payroll-related compensation" must constantly improve and improve to fully and accurately reflect the salary for each individual employee section is according to the statute, mainly depending on the productivity, quality of work efficiency, the value of each individual employee's part of labor, not distributed on average Highly skilled and technical workers play an important role in fulfilling the plan and efficiency of the company, thus paying a fair wage and income For specialized and simple specialized labor, the wage rate should be balanced with the hard salary of units in the same area, without creating an unreasonable disparity, causing losses in work Accounting must always keep up with the newly issued regime of the state and the finance ministry Establish regulations and regulations on document rotation, uniform accounting, and financial regulations of the company to work together to manage the business Accounting work in the company, especially the “accounting of payroll and payroll-related compensation " has many advantages, opening detailed tracking books, accurate and accurate accounting, helping leaders The company has accurately grasped the services for corporate governance, facilitated the productivity and efficiency of production and business and increased company profits During my internship at Xuan Hoa Packaging Co., Ltd, I was able to actually work and learn to know more about accounting, especially about payroll and payroll-related compensation I would like to express my sincere thanks to my instructor MSc Nguyen Thu Hao and the leadership and accounting department of Xuan Hoa Packaging Co., Ltd for helping me complete my thesis Sincerely, Nguyễn Quỳnh Diệp REFERENCES "Financial Accounting Textbook" - Prof Dr Teacher Ngo The Chi, PhD Truong Thi Thuy (editor), Finance Publishing House Social insurance law Health Insurance Law Circular of the Ministry of Finance - Vietnam General Confederation of Labor Employment Law 2016 Decision 48/2006 / QD-BTC dated 14 September 2006 of the Ministry of Finance Circular 133/2016 / TT-BTC Circular No 111/2013 / TT-BTC Websites: www.webketoan.com 10 Website: https://www.accountingcoach.com/payroll- accounting/explanation NHẬN XÉT CỦA ĐƠN VỊ THỰC TẬP Họ tên người nhận xét: ……………………………………………………… Chức vụ: ……………………………………………………………………… Nhận xét trình thực tập tốt nghiệp Sinh viên: Nguyễn Quỳnh Diệp Khóa CQ54; Lớp CQ54/21.CL.02 Đề tài: “Accounting for payroll and payroll-related compensation in single-member Xuan Hoa Packaging litmited liability company” Nội dung nhận xét: Về tinh thần thái độ thực tập sinh viên …………………………………………………………………………… …………………………………………………………………………… Về ý thức kỷ luật, tuân thủ quy định đơn vị thực tập …………………………………………………………………………… …………………………………………………………………………… Về kỹ giao tiếp, kỹ mềm …………………………………………………………………………… …………………………………………………………………………… Về kiến thức chuyên môn …………………………………………………………………………… …………………………………………………………………………… Người nhận xét (Ký tên, đóng dấu) NHẬN XÉT CỦA NGƯỜI HƯỚNG DẪN KHOA HỌC Họ tên người hướng dẫn khoa học: ………………………… Nhận xét trình thực tập tốt nghiệp Sinh viên: Nguyễn Quỳnh Diệp Khóa CQ54; Lớp CQ54/21CL.02 Đề tài: “Accounting for payroll and payroll-related compensation in singlemember Xuan Hoa Packaging litmited liability company” Nội dung nhận xét: Về tinh thần thái độ thực tập sinh viên ………………………………………………………………………… ………………………………………………………………………… ………………………………………………………………………… ………………………………………………………………………… ………… Về chất lượng nội dung luận văn ………………………………………………………………………… ………………………………………………………………………… ………………………………………………………………………… ………………………………………………………………………… ………… Hà Nội, ngày… tháng……năm 2020 Điểm: + Bằng số: …………… + Bằng chữ: …… Người nhận xét (Ký ghi rõ họ tên) NHẬN XÉT CỦA NGƯỜI PHẢN BIỆN Họ tên người phản biện: ……………………………………………… Nhận xét trình thực tập tốt nghiệp Sinh viên: Nguyễn Quỳnh Diệp Khóa CQ54; Lớp CQ54/21CL.02 Đề tài: “Accounting for payroll and payroll-related compensation in singlemember Xuan Hoa Packaging litmited liability company” Nội dung nhận xét: ………………………………………………………………………………… ………………………………………………………………………………… ………………………………………………………………………………… ………………………………………………………………………………… ………………………………………………………………………………… ………………………………………………………………………………… ………………………………………………………………………………… ………………………………………………………………………………… ………………………………………………………………………………… ………………………………………………………………………………… …………………………………………………… ………………………………………………………………………………… …… Điểm: + Bằng số:……………… + Bằng chữ: …………… Người nhận xét (Ký ghi rõ họ tên) ... 1.3.1.Classification of payroll and payroll related compensation 17 1.3.2.Gathering information of salary and payroll related compensation .19 1.3.3 .Accounting for payroll and payroll- related compensation. .. in Xuan Hoa Packaging Co., Ltd 36 2.2 Accounting for payroll and payroll- related compensation in Xuan Hoa Packaging Co., Ltd 39 2.2.1 Accounting for payroll and payroll- related compensation. .. situation of accounting for payroll and payroll- related compensation at Xuan Hoa Packaging Co., Ltd 42 2.3.2 .Accounting books used in accounting for payroll and payroll related compensation in