ACCOUNTING FOR PAYROLL AND PAYROLL DEDUCTIONS AT THIEN UNG SERVICES TRAINING COMPANY LIMITED

MINISTRY OF FINANCE ACADEMY OF FINANCE Student NGUYỄN THỊ HOA Group CQ5451 02 GRADUATION THESIS Topic ACCOUNTING FOR PAYROLL AND PAYROLL DEDUCTIONS AT THIEN UNG SERVICES TRAINING COMPANY LIMITED Majo.

Rationale of the study

Labor is the most important input factors of every business Improving labor productivity is the basic way to improve business efficiency and create reputation of businesses in competitive market.

To thrive and grow, enterprises must focus on enhancing production and business efficiency, making the management of wages and salary deductions a critical priority Without adequate attention to this aspect, other operational activities may prove ineffective or even counterproductive.

In the current market economy, effective labor and salary management is crucial for business operations, significantly influencing both the quantity and quality of goods and products produced by enterprises.

Payroll and payroll deductions are crucial for employees, as these payments often represent their primary source of income to support their families For businesses, payroll constitutes a significant portion of total expenses, and an effective wage regime can enhance labor productivity when aligned with employee performance While payroll management is not a new concept, existing deficiencies must be addressed to optimize salary, wage, bonus, and insurance payments within enterprises By ensuring employees receive appropriate compensation, companies can reduce costs and boost profits.

Recognizing the critical role of payroll accounting in businesses, I have chosen to focus my graduation thesis on "Accounting for Payroll and Payroll Deduction at Thien Ung Service Training Company Limited." This decision was greatly influenced by the valuable guidance of my teacher, Ms Cao Phuong Thao, and the support from the personnel in the financial accounting department.

Aims of the study

When exploring "Accounting for Payroll and Payroll Deductions," the primary objectives include clarifying essential concepts such as salary, payroll deductions, bonuses, and insurance Additionally, the study examines the payment methods utilized by enterprises, specifically analyzing Thien Ung Service Training Company Limited to evaluate their advantages and disadvantages Finally, the article aims to propose potential solutions to enhance payroll accounting and related insurance processes.

Scope of the study

This study analyzes and reviews payroll accounting and payroll deductions at Thien Ung Training Service Company Limited, focusing specifically on the company's practices The research is limited to the scope of Thien Ung Training Service Company and primarily utilizes data from February 2019.

Methodology of the study

To successfully complete a graduation thesis, various methods are employed, including data collection, synthesis, and analysis through tables and diagrams One effective approach for gathering data involves engaging with the financial-accounting department to obtain specific information, such as payroll accounting and deductions for February 2019 Additionally, utilizing diverse resources like the internet, newspapers, financial news, and previous theses enhances the understanding of payroll accounting practices in Vietnam Another valuable technique is comparison, which allows for the evaluation of similarities and differences between theoretical frameworks and practical applications of payroll accounting and deductions in the context of the Thien Company.

Ung Service Training Company Limited is focused on identifying its operational deficiencies To achieve this, the company employs analytical methods, utilizing tables and diagrams for effective data representation Additionally, a mathematical approach is implemented to accurately calculate employee payments through the use of relevant formulas.

Chapter 2: The current situation of accounting payroll and the payroll deduction to at Thien Ung service training company limited

Chapter 3: Recommendations to improve payroll regime and payroll deduction atThien Ung service training company limited

LITERATURE REVIEW

Overview of Payroll and Payroll deductions

Labor refers to the active engagement of the workforce in purposeful and conscious efforts aimed at producing goods that fulfill societal needs It represents the most distinctive and innovative endeavor of humanity, highlighting the significance of human creativity in the production process.

Labor costs refer to the total expenses associated with all labor utilized in a business and represent a significant portion of operating costs This is especially crucial for industries with high human resource labor expenses, such as construction and manufacturing, where operations may be partially or non-automated Labor costs are divided into two main subcategories: direct labor costs, which pertain to the expenses directly tied to product creation, and indirect labor costs, which support direct labor and enhance its efficiency.

Effective management of production costs requires careful control of labor expenses, which are one of the three key factors influencing product value Businesses must account for materials, tool wear, and wages paid to workers, as both high and low labor costs directly impact product pricing To optimize labor costs, companies should focus on two fundamental criteria: the quantity and quality of labor.

Payroll refers to the total compensation a business owes its employees for a specific period or date, typically managed by the accounting or human resources departments In smaller businesses, payroll may be directly overseen by the owner or a designated associate Many companies are now outsourcing payroll functions to specialized firms that manage paycheck processing, employee benefits, insurance, and essential accounting tasks like tax withholding.

Labor is a unique commodity that is exchanged for wages, which represent the price of this labor The value of labor is influenced by market dynamics, including supply and demand, and is determined through agreements between employers and employees Consequently, wages can fluctuate based on these economic factors, but they must always align with the inherent value of labor power Additionally, it is essential that wage variations maintain minimum living standards for workers, ensuring their ability to sustain themselves and continue contributing to the workforce.

Payroll deductions refer to the amounts taken from an employee's paycheck by their employer, which include mandatory government taxes and voluntary contributions such as insurance, pension plans, wage assignments, child support, and union dues.

Employers are required to withhold payroll deductions from employee checks, regardless of hours worked If deductions are not withheld, the employer assumes liability for the amounts that should have been deducted This includes insurance deductions; if these are not withheld, the employer must either pay the deductions or cancel the employee's insurance policy Therefore, it is crucial for employers to ensure that all payroll deductions are processed promptly and accurately.

In summary, employee salaries, along with deductions for social insurance, health insurance, unemployment insurance, and trade union fees, collectively represent the labor costs within the overall production and business expenses.

In addition to payroll and salary deductions, the company has established a bonus system to reward individuals for their achievements in production and business activities This bonus structure includes emulation bonuses, rewards for enhancing product quality, incentives for material savings, and recognition for technical innovations.

1.1.1.3 The roles, tasks and functions of accounting for payroll and payroll deductions

 The role of accounting for payroll and payroll deductions

Payroll accountancy is one of the most essential accounting functions within an organization that demands unique set of skills for the management of payrolls of the company

Good accounting for payroll and payroll deductions helps the personnel management in disciplined manner Also, it creates a basis for enterprises to pay insurance allowances reasonably

Effective payroll accounting and deductions are essential for managing salaries in compliance with company policies This organized approach not only ensures timely and accurate salary payments but also serves as a foundation for accurately calculating labor and business costs.

The payroll and payroll deductions tasks include the following basic tasks:

Effective organization and documentation are crucial for accurately recording employee data, including the number of employees and labor hours This process involves calculating wages, managing salary deductions, and allocating labor costs based on the specific subjects of labor utilization.

-Instructing and checking accounting staff in production and business departments and departments to implement the initial records of labor and wages according to the proper regime and methods.

-Monitoring the situation of payment of salaries, bonuses and allowances for employees.

Regularly generating reports on labor, wages, and salary deductions is essential for analyzing the labor situation This includes assessing the management and allocation of the salary fund, as well as providing timely wage labor information to department management.

Payroll and payroll deductions are significant topics for businesses due to their substantial impact on expenses, while also being a critical concern for employees as they represent their rights Employees rely on their wages to maintain stability in their daily lives and meet essential needs.

-Function of measure of value, which is the basis for managing prices properly when prices fluctuate (including labor).

To enhance employee productivity and effectiveness, it is essential to raise wages, which not only boosts economic benefits but also fosters a passion for their profession This increase in compensation encourages employees to pursue self-improvement in their professional qualifications and stay updated with advancements in science and technology, ultimately leading to more effective work performance.

- Function of supervising employees: Helping the employer through paying wages, inspecting and monitoring workers who work according to their topics, ensuring the wages paid as effective as possible.

The labor administration function is essential for ensuring that labor coordinators effectively manage workforce roles while providing fair and satisfactory wages When employees feel valued and fairly compensated, they are more likely to willingly perform their assigned tasks, regardless of time or location.

Payroll by products based on products implies the payment of wages to employees based on the quantity and quality of completed work products.

Job - based salary = Unit of products x Rate per unit

Job – based salary form including:

+ Salary form based on products directly produced by direct labor

Salary paid to employees is calculated directly according to the number of finished products which reach quality standards.

+ Salary paid for indirect labor

Accounting for payroll and payroll deductions

1.2.1 Definition and role of accounting for payroll, payroll deductions

 Definition of accounting for payroll, payroll deductions

Accounting for payroll play a vital role in all companies with a staff of employees.

All businesses, regardless of size, must adhere to payroll reporting and compliance regulations at local, state, and federal levels Payroll accountants serve as crucial intermediaries, facilitating financial reporting and compliance between organizations, their employees, and government entities.

Payroll and payroll deductions are crucial aspects of business operations, representing significant expenses for companies while also being a vital concern for employees, as these payments are their rightful earnings Workers rely on their wages to maintain their daily lives and meet essential needs.

 The roles of accounting for payroll, payroll deductions

Payroll accounting and payroll deductions are crucial for ensuring timely and accurate payroll operations while adhering to federal, state, and local regulations Payroll accountants must possess a thorough understanding of essential tasks, including paycheck calculations, taxation principles, and the preparation of ledgers and journals They are responsible for the proper disbursement of funds and the maintenance and updating of employee leave balance information.

Vouchers in payroll accounting are essential for tracking employee working hours and managing various payables, including salaries, wages, allowances, bonuses, travel reimbursements, overtime, and other wage-related expenses.

The accounting vouchers consist of:

- Form 01a – LDTL – Timesheet: is a method for recording the amount of a worker's time spent on each job by month or by week.

- Form 02 – LDTL – Timesheet for overtime

The Wage Payment Table (Form 03 – LDTL) is essential for each production group and management department, as it details the names of individuals along with their respective wage amounts This organized documentation ensures transparency and accuracy in payroll processing across the organization.

The Form 04 – LDTL – Bonus Payment Table is essential for each production group, department, and business division, serving as the foundation for calculating employee payments This table also plays a crucial role in determining deductions for social insurance and health insurance for workers.

- Form 06 – LDTL – Overtime pay table

Form 08 – LDTL – Exchange contract serves as a formal agreement between an employer and an individual, outlining the workload, working hours, and responsibilities of both parties involved This contract establishes the terms of employment and concludes once the job is completed, providing a foundation for wage payments to the contractor.

This account tracks the total funds and payment obligations related to employee compensation, including salaries, wages, bonuses, and other income Additionally, it is utilized to account for wages owed to outsourced personnel within the enterprise.

The structure and the content of reflection of the account 334

- Deductions of salaries and wages from the employees’ salaries

- Salaries, wages, bonuses, social insurance and other amounts which have been paid or advanced to employees

- Amounts payable to employees such as salaries, wages, bonuses and social insurance

Debit balance (if any) shows overpay for employees.

Credit balance shows salaries, wages and other amounts payable to employees.

Form no 10-LDTL: The list remitted wages

Form no 11-LDTL: Allocation table wages and social insurance

Account 338, labeled "payable and submitted," is utilized to record amounts owed to legal authorities, organizations, and social associations This account encompasses expenses related to union fees, social insurance, health insurance, and payroll deductions mandated by court decisions, such as child support payments following a divorce and legal costs Additionally, it includes the value of excess assets pending processing, short-term bets, funds encashed on behalf of others, and money held for individuals.

Social Insurance expenses refer to the contributions made by both employers and employees to the government, ensuring financial support for individuals who are unable to work due to age, illness, or other circumstances.

Under the current regime, social insurance is calculated that the rate of 25.5% of the total wage must be paid to employees in each period

- Employers must bear 17.5% of the total wage or salary included in production expenses.

- Employees must bear 8% of the total salary by deduction into their salaries.

Account 3383 – Social insurance: reflecting accruement and payment of social insurance at units.

- Amounts of Social Insurance fees paid to manage fund agencies of social insurance

- Appropriating Social Insurance fees into operating expenses or salaries of employees;

Health insurance expenses represent the costs a business incurs for its employees' medical insurance coverage When these expenses pertain to employees in selling and administrative roles, they are recorded in the corresponding section of the income statement Conversely, if the expenses are associated with production employees, they are allocated to the cost of goods sold.

Health insurance expense is 4.5% of the total wage payable to employees, in which:

- Employers must bear 3% and be included in production and business costs.

- Employees must pay 1.5% by deducting from their salaries.

Account 3384 – Health insurance: reflecting accruement and payment of health insurance by units.

- Amounts of Health Insurance fees paid to manage fund agencies of social insurance

- Appropriating Health Insurance fees into operating expenses or salaries of employees;

Unemployment insurance expenses refer to the financial obligations businesses have to cover when employees lose their jobs Currently, this insurance is set at 2% of the total salary for each accounting period, with employers contributing 1% as part of their production and business costs, while employees also contribute 1% through salary deductions.

Account 3386 – Unemployment insurance: reflecting accruement and payment of unemployment insurance by units.

- Amounts of unemployment Insurance fees paid to manage fund agencies of social insurance

-Appropriating Unemployment Insurance fees into operating expenses or salaries of employees;

A trade union is an organization created by workers to advocate for their rights and interests with employers, aiming to enhance working conditions and wages Consequently, trade union fees serve as a financial resource to support union activities across various levels.

- According to the current regulations, that fees is deducted at the rate of 2% of the total amount.

- Salary must be paid for each accounting period and included in the business and production expenses, including 1% for the grassroots trade union and 1% for the upper union.

Account 3382 – Trade union fees: reflecting accruement and payment of trade union fees by units.

- Trade union fees disbursed at units;

- Amounts of trade union fees paid to manage fund agencies of trade union fees.

- Appropriating trade union fees into operating expenses or salaries of employees;

- Overspending trade union fees which are granted additionally;

Accounting books used

A journal entry marks the initial stage of the accounting or bookkeeping process, where all financial transactions are systematically recorded in the general journal in chronological order This general journal operates on the double-entry accounting system, ensuring that each transaction impacts at least two accounts.

Other names used for general journal are “journal book” and “book of original entry”.

 The process of making a journal entry

The first step in the process of preparing a journal entry is to analyze the accounts involved in a business transaction and then apply the rules of debit and credit

To accurately record a transaction, first identify the types of accounts involved and determine the applicable rules The journal entry is then documented in the general journal, following a specific format that includes essential details.

4 A brief narration to describe the transaction

Diagram 1.1: Diagram of accounting payroll and payroll deductions recorded in the general journal form

Record daily Record at the end of the month or periodically Reconciliation and Examination

A journal ledger is a vital bookkeeping tool that records economic transactions in chronological order and by account type, consolidating them into a single general accounting book Accountants and bookkeepers utilize journal ledgers alongside subsidiary ledgers and accounting vouchers to efficiently document, organize, and verify financial data However, the reliance on a singular journal ledger can pose challenges for medium and large enterprises, particularly when it comes to implementing effective division of labor.

Financial statementsWage payment table

Diagram 1.2: Diagram of accounting for payroll and payroll deductions recorded in the Journal ledger form

Record at the end of the month or periodically

A journal voucher is a document on which is stored the essential information about an accounting transaction This voucher contains the following information:

 Supporting references to documentary evidence

General table of accounting vouchers of the same type

General detailed reports Journal Ledger

Financial statementsWage payment table

A journal voucher is a written authorization to make a transaction entry, and so is a key document that is examined by auditors as part of their audit procedures.

Diagram 1.3: Diagram of accounting for payroll and payroll deductions recorded in the Journal voucher form

A general journal is the part of the accounting record keeping system in which transactions are entered The four types of journals include sales, cash receipts, purchases, and cash disbursements

A general ledger is the account used to store and sort the balance sheet and income statement transactions Accounts included are cash, accounts receivable, investments, inventory, equipment, and land.

In other words, a journal voucher makes entries into the general journal, whose transactions are then used for the preparation of the ledger

Journal LedgerFinancial statementsWage payment table

Diagram 1.4: Diagram of accounting for payroll and payroll deductions recorded in

General table of accounting vouchers of the same type

Registration book of general journal voucher

Factors influencing Salary and Salary deductions

1.4.1.1 Supply demand of labor market

In the labor market, wages are influenced by the relationship between supply and demand When labor supply exceeds demand, wages tend to decline, while an increase in demand over supply leads to rising wages Equilibrium is achieved when labor supply matches demand, resulting in stable wages However, this balance can be disrupted by changes in factors such as the marginal productivity of labor and the prices of goods and services.

Changes in the cost of living directly impact real wages, as an increase in living expenses leads to a decrease in real wages Consequently, businesses must raise nominal wages to help workers maintain a stable standard of living and prevent a decline in their purchasing power.

The policies of the business: the policies of wages, allowances, prices applied thoroughly and appropriately will encourage employees to improve productivity, quality, efficiency, directly increase their income.

The financial capacity of a business significantly influences employee wages Companies with substantial capital can easily and reliably pay their employees, while those with unstable financial resources often struggle to provide consistent salaries.

The organizational structure, whether rational or unreasonable, significantly influences salary levels Effective management and strategic workforce arrangement are essential for overseeing operations and implementing measures to enhance productivity Consequently, a well-organized structure leads to improved production efficiency, which directly impacts the salary framework within the organization.

Highly qualified workers earn significantly higher incomes than their lower-level counterparts due to the extensive training and effort required to reach their skill level Employers are willing to offer competitive salaries for positions that demand advanced knowledge and qualifications, reflecting the value placed on specialized expertise in the workforce.

Work experience and duration are closely linked, as individuals with extensive experience tend to develop a strong sense of responsibility and risk management in their roles This leads to higher quality productivity and, consequently, increased salaries Additionally, the speed and quality of job completion directly influence workers' wages.

In conclusion, payroll accounting and payroll deductions are affected by both internal and external factors, so companies should find a good accounting management.

THE STUDY

Overview of Thien Ung Service Training Company Limited

2.1.1 Establishment and development of Thien Ung Training Service Accounitng Company Limited

2.1.1.1 The establishment of Thien Ung Training Service Accounting Company Limited

Founded in 2013 by Mr Hoang Trung That, Thien Ung Accounting Company aims to assist students and individuals unfamiliar with accounting The company collaborates with experienced lecturers, including chief accountants and accounting experts, to deliver engaging lectures that capture student interest In addition to providing training that equips students with practical experience equivalent to 3-4 years in the field, Thien Ung Accounting Company partners with various organizations to offer internship and employment opportunities for students.

 Creating the most dynamic, professional and effective working environment for the Company's staffs;

 Creating conditions for officials to actively promote the maximum ability and creativity in work;

 Developing and maintaining the leading reputation in financial advisory, bringing the best services to customers, and the most satisfaction to shareholders.

 Reputation is the most important asset of the Company;

 Ethics is the most important quality of its employees;

 The goal of the company

Support accounting students in the last year to practice at the Company: Instructing to make internships reports, select topics, provide data, stamp to confirm internships.

Create favorable conditions for newly graduated accounting students, accountants to be exposed to practical accounting jobs, improve their professional skills, learn from experience from the former chief accountants.

Training new accountant with high professional skills, who can master their own tax and financial statements.

Advice to support and solve problems that businesses are having to deal with accounting books and Tax.

Supporting business managers and leaders who can manage their business accounting system well, whether they are doing right or wrong.

Thien Ung Training Service Accounting Company offers free accounting resources, equipped with high professional expertise to assist businesses With extensive experience in managing real-world accounting operations, the company is dedicated to addressing the challenges enterprises encounter.

After 7 years of establishment, the company has expanded many branches and achieved many rewards After 7 years of establishment and development, the company has affirmed its position in both teaching and accounting fields The company has been one of the leading accounting training centers in Vietnam and also one of the most prestigious accounting and financial consulting firms in Vietnam Up to now, the company has collaborated with many other companies and trained thousands of students, all of whom have leaved great feedback.

2.1.2 The main activities and the organizations of Thien Ung Training Service Accounting Company Limited

2.1.2.1 The main activities of Thien Ung Training Service Accounting Company Limited

When a company lacks experienced accountants or faces a shortage in its accounting department, it often turns to external accounting services These services handle a variety of accounting tasks, including reviewing and auditing accounting records, balancing profit and loss statements, and preparing annual financial statements for various types of enterprises.

Services help to manage tax accounting issues and focus on strategic tax aspects of the business Services include:

 Tax basis balance sheet support

 Issue-specific tax accounting consulting, including valuation allowance assessments, business combinations and etc

Financial reports are essential for organizations and businesses as they facilitate the analysis and evaluation of financial performance over previous years and on a quarterly basis In essence, these reports offer a comprehensive overview of past performance and current standing, helping organizations understand their financial health and make informed decisions.

The company will train all the student from basis accounting knowledges to becoming a good accountant by many accounting experts, general accountant and so on

2.1.2.2 The organization of the company

Based on business field, basic mission of a commercial enterprise, the management system Thien Ung Training Service Company Limited has been organized as the first chart follows:

Chart 2.1: The organization of Thien Ung Training Service Company

The director plays a crucial role in overseeing the operations and resources of the company, ensuring the recruitment and retention of a skilled and motivated workforce essential for achieving the organization's mission and objectives Additionally, the managing director is responsible for preparing both a corporate plan and an annual business plan, while also monitoring progress to ensure that the company meets its goals efficiently and cost-effectively.

 Assisting the board of directors to design the company's overall mission, values, and strategic goals.

 Attending meetings with the board of directors and sharing company information.

 Leading, guiding, directing, and evaluating the work of other employees, such as Managers, and ensuring a healthy working environment.

 Contributing to sales innovations, strategic business development, and the profitability of the company as determined by the company's strategic goals.

Head of Sale Department StaffStaff Vice Director

 Evaluating the success of the company in achieving its goals and formulating plans to correct any issues if the company is not achieving its goals.

 Managing the daily operations and revenue generation of the company and ensuring its continual growth.

 Assisting in maximizing the company's operating performance and achieving its financial goals.

 Assisting in managing the company's finances, identifying ways to increase revenue and decrease costs, analyzing financial reports, and preparing operating budgets.

This department includes chief accountant, general accountant… Their main responsibility is monitoring the financial status of the company

 Looking for the Sales Opportunities with the existing and new customers to sell products and services.

 Organizing effective presentation to the customers regarding the requested product and service

 Contacting with the customers to know their needs and requirements

 Identifying the target budget for each year with following-up percent of the budget realization each quarter of year

 Developing the rapports with all existing and new customers to know their demands

The accounting form refers to the systematic book-keeping method employed to organize and consolidate data from original documents in a specific order Recently, Thien Ung Training Service Accounting Company Limited has adopted the General Journal for their accounting processes.

The General Journal is a straightforward accounting tool that facilitates the chronological recording of all economic events This method allows for easy tracking of debits and credits, making it simpler to identify and correct errors Once the items are documented in the General Journal, accountants subsequently transfer the information into a ledger for further processing.

2.1.3 The features of accounting system of Thien Ung Service Training Company

2.1.3.1 The organization of accounting system

As a division of an independent accounting firm, the Company boasts a comprehensive accounting system tailored to the needs of its consulting business structure This robust accounting framework is effectively illustrated in the accompanying chart.

Chart 2.2: The chart of accounting system

Chief accountants: Have responsibility for directing and guiding the work of accounting, accounting information of the company and the work of finance.

A general accountant plays a crucial role in analyzing and preparing essential financial documents, including tax returns, income statements, and balance sheets They meticulously track the flow of money, ensuring that all incoming and outgoing transactions are accurately recorded Additionally, general accountants are responsible for maintaining up-to-date financial statements, providing a clear picture of an organization's financial health.

Accountant Tax Payroll accountant Treasurer accountant to stay current on tax regulations and make sure that taxes are paid correctly and on time.

Payment accountants are responsible for overseeing and monitoring all company transactions, enabling the board of directors to effectively manage the company's financial health For instance, they play a crucial role in collecting tuition fees from students enrolled in training programs offered by the company.

Tax Accountant is responsible for assisting clients and companies with their financial and income tax statements Their work includes preparing payments, identifying tax savings, and analyzing tax issues.

A payroll accountant is responsible for preparing employee salary statements and issuing paychecks, ensuring the accuracy and reconciliation of payroll-related accounts Their role is crucial in maintaining precise financial records related to employee compensation.

Treasurers: have responsibility to manage income cash funds, export cash funds in the company.

2.1.3.2 Accounting form, applied accounting policy and reporting system at the company

The accounting form serves as a systematic framework for recording and organizing data from original documents in a structured manner Thien Ung Training Service Accounting Company Limited utilizes the General Journal, a straightforward accounting method that allows for easy chronological recording of all economic events This approach not only facilitates the tracking of debits and credits in case of errors but also ensures that accountants can efficiently transfer entries from the general journal to the ledger.

Diagram 2.1: Diagram of general journal form

Record daily Record at the end of the month or periodically Reconciliation and Examination

- The company’s fiscal year starts on 1 January and ends on 31 December The accounting period is calculated by month.

- The currency unit used in accounting records and financial statements is Vietnam Dong.

- VND / USD exchange rate at the average real interbank exchange rate at the time it occurs.

The accounting regime outlined in Circular No 133/2016/TT-BTC, issued by the Ministry of Finance on August 26, 2016, provides guidelines for financial reporting Thien Ung Training Service Accounting Company selects the appropriate accounting regime—either No 200/2014/TT-BTC, No 133/2016/TT-BTC, or No 132/2018/TT-BTC—based on the scale of enterprises as defined by Decree No 39/2018/NĐ-CP or specific enterprise requirements.

General detailed reports General ledger

- Method of accounting VAT: the deduction method.

- Depreciation method: The straight-line depreciation method.

- Inventory accounting method: The periodical declaration method

Thien Ung Service Training Company Limited is a small enterprise, so the company has used 3 types of financial statement:

The annual financial statements, aligned with the calendar year from January 1 to December 31, must be submitted within 90 days following the conclusion of the accounting period These statements are essential for tax agencies, statistics agencies, and business registration agencies.

The current situation of accounting for payroll and the payroll deduction

deduction at Thien Ung Service Training Company Limited

2.2.1 The features of labor, payroll and payroll deduction at Thien Ung Service

The company's workforce comprises two categories: in-house employees and outsourced staff While the in-house team is small, it consists of highly skilled accounting professionals and renowned general accountants with extensive experience Currently, there are nine main employees, excluding temporary and intern workers.

The age of employee ranges from 30 to 36 years old.

About knowledge 100% is already graduated from famous university such asAcademy of Finance, Banking Academy and National Economics University

The Company has implemented efficient teaching plans and streamlined accounting services to eliminate unnecessary labor In terms of labor management, it utilizes rule-based management and conducts daily attendance checks through fingerprinting, ensuring a fair reward system for employees who perform their tasks effectively.

 Payroll and payroll deduction features

In addition to the main salary, employees will receive the following allowance Allowance

Responsibility: base on position, the company will difference allowance rate

All official employees who signed labor contract for 3 months or more are entitled to the following allowance levels

Table 2.1: The table about allowance rate at Thien Ung service training company

The above allowance is calculated for 26 work days

People who sign a contract of more than 3 months will receive the benefits specified in the labor contract

Housing rental support: Workers who have to rent houses to stay.

+ Laborers signed labor contracts for 6 months or more (excluding part-time workers).

+ Labors provide full rental contracts with their name or their wife/husband.

A housing assistance ranges from 1,000,000 to 2,000,000 VNĐ per month according to the actual working day divided by 26 days.

For employees with children under 36 months of age or younger.

+ Laborers signing labor contracts of 6 months or more (not including seasonal workers).

+ Provide birth certificate of children.

Raising child support ranges from 1,000,000 to 2,000,000 per month according to the actual number of working days divided by 26 days.

Employees are organized to travel according to the decision of the company management.

+ Family members VND 500,000 / person / time.

+ Every month, the company organizes a birthday for employees with the same birthdays in the month

+ On 1/6 of every year, the company will have gifts for employees with children aged 7 and under.

Gifts for holidays and New Year:

Based on the annual business results, employees are given gifts with difference rate

+ International Women's Day - 8/3 and 20/10 for female employees signing labor contracts for 6 months or more: VND 100,000 / person.

During the Lunar New Year, enterprises will determine gift-giving expenses for employees based on the company's annual business performance Additionally, employees will receive support during sick leave or maternity visits.

+ The employee himself must go to the hospital: VND 300,000 / person / time. + Female laborers give birth: 300,000 VND / child / time.

2.2.2 Payment methods and salary calculating methods

The payment structure is determined by time and seniority rates, with all wages, benefits, overtime, deductions, and advance payments transparently detailed in the payroll Each month, the company provides a clear explanation of social insurance contributions through these payrolls Employees will be informed about their benefits and the procedures for accessing social insurance and unemployment benefits within their labor contracts.

The company applies the basic wage according to Article 5 of Decree 90/2019 / ND-CP

According to Article 3 of Decree 90/2019/ND-CP, the regional minimum wage serves as the foundational salary level for businesses to compensate employees and for workers to accept job offers This wage must be paid for normal working conditions, ensuring that employees work adequate hours each month and meet the agreed-upon labor standards.

- The wage is not lower than the regional minimum wage for laborers doing the simplest jobs.

- The wage is at least 7% higher than the regional minimum wage for laborers requiring that they have undergone vocational training.

Currently, the minimum wage is 3.920.000 with laborers doing the simple jobs and the the minimum wage is 4.194.400 with the university degree or vocational training.

Basic salary = Minimum wage + allowance

Total salary in a month = Basic salary + allowances + bonuses (if have)

Net salary = Total salary in a month – salary deductions.

Example: Mr Nguyen Duc Viet – Chief accountant (according to the payroll in February 2019 of accounting department)

(in which 5.500.000 VND is basic salary and 500.000 is VND Responsibility, each person will have a difference salary to calculate insurance)

The Insurance that Mr Nguyen Duc Viet has to pay is: 6000.000 x10.5%c0.000 VND

The real salary that he is received is 6.646.154 – 630.000- 77,538= 5.938.615

Table of bonuses payment Sample 03-LDTL

Table of apportioning salaries and social insurance

• Form no S03a - DN: General journal

• Form no S03b - DN: General ledger

• Form no S38 - DN: Detailed account

Accounting for salaries and bonuses

2.3.1The policy of accounting for salaries and bonuses

The salary of employees including:

The main salary is the compensation provided to employees based on their qualifications and vocational skills It is designed for those working under normal conditions, ensuring that they receive fair pay for a standard month's work.

- Probationary salary: 85% of the main salary

Employees will receive allowances in addition to their main salary, which includes specific support for each job title, such as lunch, mobile phone, and mileage allowances These allowances are applicable to all employees and will be calculated after a three-month probationary period based on the number of working days in that month Additionally, a responsibility allowance will be provided for positions from Head of Department and above.

Bonuses are supplementary payments to salaries that recognize employee contributions based on the company's production and business efficiency They serve as a powerful incentive, motivating employees to enhance their performance Understanding the significance of bonuses, Thien Ung Service Training Company has implemented various bonus types to reward and encourage its workforce.

Source of bonuses: Bonus based on annual profit of the company

Conditions to enjoy: all Company’s employees who have good performance in working period

1 In working period, being absent without permission, being disciplined by warning or more serious manner, or violating the non-bonus regulations as prescribed in the “Labor Regulations”.

2 During the time awaiting disciplinary review, temporarily leaving without consideration of bonuses.

3 Working time is less than 12months, moving to others company with unreasonable causes

4 Terminating the labor contract with lump-sum allowance.

At the end of each year, during the Lunar New Year, the Company allocates a year-end bonus to its employees if it achieves profitable business results This bonus is derived from the company's profits and is distributed based on individual contributions, work quality, and adherence to internal policies.

 Seniority bonus: Employees who have been with the company for more than

3 years will have bonuses announced at the last salary payment month of the year.

During the holidays of April 30th and May 1st, as well as the Lunar New Year, employees can expect bonuses ranging from 200,000 VND to 500,000 VND The exact amount will depend on individual performance, adherence to company labor regulations, and overall contributions to the organization.

At the end of each calendar year, the Sales Department will receive a sales bonus based on the revenue targets set by the Board of Directors Employees will be rewarded with a bonus amounting to 1% of the monthly revenue they generate for the company.

The timesheet serves as a crucial foundational document for tracking employee working hours in businesses It effectively records the actual hours worked each month, as well as any absences of staff members within teams or departments.

At the end of each month, departments will submit timesheets for all employees to verify their working days before forwarding them to the accounting department Using the data from the fingerprint scanner and the monthly timesheets, accountants will then prepare the payroll.

THIEN UNG SERVICE TRAINING COMPANY LIMITED

Block B1,233 Xuan Thuy street, Thanh Xuan district, Hanoi

Mo n Tu es Su n Mo n Tu es We d Th ur F ri S at Su n Mo n Tu es We d Th ur

01 Hoang Trung That Manag er x x T T T T T N N N N x

02 La Van Nam Manag er x x T T T T T N N N N x

03 Nguyen Duc Viet Emplo yee N x T T T T T N N N N N

04 Hoang Van Hao Emplo yee x x T T T T T N N N N x

05 Dang Thi Thuy Emplo yee x x T T T T T N N N N x

06 Tran Tuan Anh Emplo yee x x T T T T T N N N N x

07 Vu Duc Long Emplo yee x x T T T T T N N N N x

08 Nguyen Duc Trung Emplo yee x x T T T T T N N N N x

09 Tran Thi Lan Emplo yee

N: Day off X: working day P: Paid leave

Sa t Sun Mon Tues Wed Thur Fr i

Sa t Sun Mon Tues Wed Thur

After completing timesheets, accountants compile a list of employees eligible for bonuses by department This list is then submitted to the chief accountant and director for approval and signatures Once approved, the bonuses are added to the employees' salaries for that month Below is a sample list of employees from the sales department who received bonuses from the company.

No Name Position Basic salry Bonus Note

(Sign, name) ( Sign, name ) ( Sign, name )

In addition, if there are many holidays in the month, company will have other bonus for employee For example, Lunar new year bonus table.

Table 2.4 Lunar new year bonus

No Name Position Amount Sign

In word: Forty three million one hundred thousand

(Sign, name) (Sign, name) (Sign, name)

The payroll is a government-issued document that outlines specific salary levels for various jobs and occupations It details the salary ratios among employees within the same profession based on their level, work experience, and actual performance The structure of the salary table includes the salary scale, salary grades, and salary coefficients.

No Code Name Position Basic Salry

Total Work Responsibility Lunch Mobile Petrol Child Total Days

Company Salary Deduction Employee Salary Deduction Deduction

(sign,name) (sign,name) (sign,name) (sign,name)

After preparing the payroll table, the finance department will securely store the original salary payment records along with the summary of salaries linked to the payment orders for transferring salaries to employees' bank accounts Subsequently, accountants will create a detailed allocation table for payroll and social insurance contributions.

Table 2.6: Distributing table of wages and social insurance

ALLOCATION TABLE OF WAGES AND SOCIAL INSURANCE

Account 338-Other payments (Crediting to accounts) Total Salary

Next, it is summary table of salary

Table 2.7: Summary table of salary

Paya ble perso nal tax

Responsibil ity Lunch Mobile Petrol Child Total Social

On March 5, 2019, accountants will document all payroll transactions and deductions in the general journal, accurately determining the payables owed to the enterprise's staff and employees.

Credit account 334 77,262,000 b On 5 th March 2020, the company make payment about salary and allowance for all employee and, the following accounts shall be recorded as follows:

Credit account 112 77,262,000Finally, accountant will make payment for employees

03/PTT-TL Name: Tran Thi Lan Position: Sale staff

No Description Amount Work days Total

In words: Two million four hundred thousand VND

No Date Debit Credit Note

Opening balance Arising amount in month 5

Accumulated plus from the beginning of quarter

The general journal serves as the primary record for all company transactions, encompassing every journal entry Typically, it consists of at least five essential columns: the date, account titles, posting reference, and separate columns for debits and credits.

After having detailed figures, accountants will record all transactions related to salary and salary deduction and make general journal.

THIEN UNG SERVICE TRAINING COMPANY

Deduct social insurance from salary 334 4,945,500

Pay social insurance to the agency 3383 12,010,500

19 Pay payable trade union fee 3382 942,000

Total transferring to the next page x x 114,650,154 114,650,15

After that, the accountant will make general ledger of accounts:

For example: account 334: payables to employees and account 3382

Block B11, 181 Xuan Thuy Street, Cau Giay District, Hannoi

Opening balance Arising amount in month 31/12 31/12 Salary deductions on social insurance, health insurance, the expenses of union

31/12 31/12 90 The payment of wages to personnel 111 47.581.798

Closing balance Accumulated plus from the beginning of quarter X x

- This book included 2 pages, from page 01 to02

2.3.4.Social insurance allowance for employees

Thien Ung Service Training Company Limited adheres to state policies and regulations by offering allowances to employees in situations such as illness and maternity leave The company ensures proper management of social insurance, health insurance, trade union, and unemployment insurance allowances, with accountants preparing vouchers based on a reasonable assessment of basic salaries.

Salary deductions include: Social insurance, Health insurance, Trade union funds, unemployment insurance

Under the current regime, social insurance fund is formed by 25.5% of the total wage payable to employees in each accounting period, of which:

- Employers must bear 17.5% of the total salary fund and be included in the cost of production and business.

- Workers must bear 8% of the total salary by deduction on their salaries.

In normal conditions, there are many benefits if employee A has Social Insurance:

- Working time is less than 15 years, employee will get 30 days off per year.

- working time ranges from 15 years to 30 years, 40 days / year are entitled to leave.

- Over 30 years, 50 days off per year are allowed.

If working in a hazardous or heavy environment, where the regional allowance is 0.7, the employee shall be entitled to an additional 10 days leave comparing with normal working level.

In the long term, employees diagnosed with specific illnesses recognized by the Ministry of Health are entitled to a leave of absence not exceeding 180 days per year, which includes the duration covered by social insurance payments.

Accounting for payroll deduction

At the end of the month, accountants compile health and social insurance receipts based on salary levels for each department and productive team, subsequently calculating the insurance contributions owed by each individual according to established regulations.

The social insurance fund is established by deducting a specified percentage from the total monthly salary and allowances, managed according to established guidelines This deduction is set at 25.5% of the total salary payable for each accounting period.

 Employers must bear 17,5% and be included in production costs

 Employees must bear 8% of the total salary deduction

Health insurance fund is a fund used to pay workers' contributions to medical and treatment activities, formed by 4.5% of total salaries paid to employees, of which:

 Employers must bear 3% and be included in production costs

 Employees must bear 1.5% of the total salary deduction

Unemployment insurance is a financial benefit that employers are required to provide to employees who become unemployed Under current regulations, a total of 2% of the employee's salary is allocated for unemployment insurance each accounting period, with the employer contributing 1% as part of production and business costs, while the remaining 1% is deducted from the employee's salary.

Trade union fee is a grant fund for union activities at all levels.

Under current regulations, a deduction rate of 2% is applied to the total salary payable for each accounting period, which is accounted for in production and business costs This deduction consists of 1% allocated for grassroots trade union operations and another 1% directed to the upper union.

2.5.6 The calculation payroll deduction at Thien Ung Service Training Company Limited

Thien Ung Service Training Company Limited is committed to meeting its enterprise obligations by establishing specific expense guidelines for its employees, and it mandates that all relevant divisions adhere to the directives set forth by the Board of Directors.

Example 2: Mr Nguyen Duc Viet receives her monthly basic wages of 6,000,000

VND ( it includes minimum salary and Responsibility salary)

- The number of working days: 18 days

The payroll deduction is calculated by following table

Items The deduction rate of the enterprise

The deduction rate of the employee

After calculating payroll deduction, accountant will make journal entry There are many accounts that accountant use to make journal entry:

 Account 338 - Other payables along with its four sub-accounts including

When deducting social insurance, health insurance and unemployment insurance from enterprise, the following accounts are recorded.

When deducting social insurance, health insurance and unemployment insurance from employees, the following accounts are recorded.

Then, accountant transfers social insurance, health insurance, unemployment insurance and trade union fee the company paid into its expenses, the following accounts are recorded.

The company is required to contribute a total of 34% of the salary fund for payroll deductions To facilitate effective management and oversight of accounting tasks associated with payroll and deductions, a comprehensive allocation table for wages and social insurance has been established.

Table 2.15: Distributing table of wages and social insurance

ALLOCATION TABLE OF WAGES AND SOCIAL INSURANCE

Account 338-Other payments (Crediting to accounts) Total

Social insurance Health insurance Unemployment insurance

After that, accountant will record in General Journal.

Appreciating social insurance, health insurance, unemployment insurance and trade union fees deducted from operating expenses

Total transferring to the next page x x 11,068,500 11,068,500

Basing on the general journal, relevant general ledger and detailed accounts are recorded.

Opening balance Arising amount in month 05/02/2019 BPB10/0

Pay social insurance into agency 338 15,072,000

Pay payable trade union fee 338 471,000

Closing balance Accumulated plus from the beginning of quarter

Opening balance Arising amount in month

Deduct social insurance from salary 338 4,945,500

Accumulated plus from the beginning of quarter

Opening balance Arising amount in month

05/02/2019 BPB10/02 05/02/2019 Deduct social insurance from salaries

05/02/2019 BPB10/02 05/02/2019 Transfer social insurance into expenses

05/02/2019 BPB10/02 05/02/2019 Pay social insurance to agency

05/02/2019 BPB10/02 05/02/2019 Payable trade union fees

Closing balance Accumulated plus from the beginning of quarter

No Date Debit Credit Debit Credit

Transfer trade union fee into expense 641

Pay payable trade union fee

Deduct social insurance from salary

Transfer social insurance into expense 641

Pay social insurance to the agency 111 12,010,500

Date Vourcher Description Contra accoun

Deduct social insurance from salary 334

Transfer social insurance into expense 641 330,000 330,000

Pay social insurance to the agency 111

Deduct social insurance from salary 334

Transfer social insurance into expense 641

Pay social insurance to the agency 111

Then, the accountant will record it in general ledger of account 338 as follows:

In light of the rapid economic development, optimizing the accounting system, particularly payroll and payroll deductions, has become essential for enhancing business efficiency This process encompasses not just wages, bonuses, and salary allowances, but also upholds employees' rights, fostering a sense of security in their work environment Therefore, I would like to offer insights and recommendations to improve the payroll accounting system within the company.

3.1 The evaluation of current situation of accounting for payroll and the payroll deductions at Thien Ung Service Training Company Limited

The company's management system is efficient and well-structured, enabling all departments to operate effectively and provide timely, accurate information to leadership A tailored monitoring system oversees employee activities, aligning with the company's unique characteristics to meet management needs Committed to employee development, the company fosters opportunities for skill enhancement and continuous learning, adapting to evolving work demands This dedication has garnered positive feedback from both students and other businesses, serving as a strong motivation for the company to enhance its professional training initiatives.

The company's accounting system operates under the guidance of the board of directors, with all accountants reporting to the chief accountant This system is logically structured and tailored to the qualifications of each team member, who possess professional expertise, competence, enthusiasm, and integrity The team comprises experienced accountants capable of applying theoretical regulations to the company's specific context in a flexible and innovative manner, while consistently seeking to enhance their professional skills.

Accounting vouchers, including payment vouchers and receipts, are structured according to the applicable accounting regulations and tailored to the company's specific operational needs To enhance efficiency, the company has developed distinct vouchers for its accounting processes Additionally, utilizing a general journal accounting format simplifies and streamlines the company's accounting practices.

Employees practice accounting job via accounting software throughout the company to help capture information and work quickly.

In general, the accounting work is conducted scientifically, which ensures compliance with the current accounting regime, in accordance with the accounting conditions of the Company, meeting management requirements.

Employee allowances and social welfare play a crucial role in enhancing job satisfaction and motivation, ultimately leading to improved performance in assigned tasks To foster a positive work environment, companies should ensure transparent communication regarding the benefits available to part-time employees and those on trial periods.

A significant number of employee absences can negatively impact both productivity and the quality of teaching within the company Additionally, frequent leave-taking may disrupt the working environment, fostering a culture of permissiveness regarding absenteeism.

Paying employees in cash is time-consuming and can lead to significant amounts of money being exchanged, increasing the risk of underpayment Additionally, this method places a heavy burden on accountants, who spend excessive time managing these transactions.

There are many reasons for the inadequacy of salary accounting, these reasons stem from both employees and the company's accounting policy.

The company has yet to establish a transparent and equitable subsidy and allowance system Additionally, employees must advocate for their rights to receive clear benefits, which will aid the company in identifying and addressing its shortcomings.

The company currently lacks a defined number of holidays each month, resulting in a lax employee management policy To enhance overall efficiency, particularly within the accounting department, it is essential for the company to implement stricter labor management policies.

Suggestions to improve accounting for salary and salary deductions at

3.2.1 Improving a clear allowance and subsidy regime

The company must clearly communicate the benefits and allowances available to part-time employees Despite their shorter working hours, it is essential to establish a framework for bonuses and additional benefits that recognizes their contributions.

It eliminates the gap between official employees and part-time employees. Moreover, the company can promote employee performance, create motivation, and create an equal working environment.

The company should establish a clear policy regarding employee leave days, incorporating a system that rewards those who meet a designated number of working days each month while penalizing employees with excessive absences This approach not only promotes accountability but also contributes to maintaining a stable workforce, ultimately ensuring optimal operational efficiency for the organization.

3.2.3 Improving training of manager and workers

To enhance business efficiency and improve accounting practices, companies should consistently invest in the professional development of their employees This can be achieved by regularly updating them on the latest accounting systems and encouraging participation in accounting forums.

While the company's accounting functions are generally effective, there are notable areas for improvement The leadership team must focus on enhancing the accounting department's operations to minimize minor errors Additionally, it is crucial for employees to continuously upgrade their skills and exercise greater diligence in their work to prevent these small mistakes.

An efficient accounting system is crucial for maximizing business benefits, particularly in today's evolving economic landscape The advancement of salary accounting systems is vital, requiring innovative applications of accounting practices tailored to the company's specific conditions However, it is essential to ensure that these practices remain within the boundaries of the current accounting regulations.

During my internship at Thien Ung Service Training Company, I gained valuable insights into the company's operations, which significantly enhanced my knowledge and professional skills This experience was crucial for my graduation thesis on "Payroll and Payroll Deductions," as I aimed to contribute to improving the payroll processes at Thien Ung Acknowledging my limited experience and the short duration of my internship, I appreciate the constructive feedback from my lecturer, which will help me refine my thesis to the best of my ability.

I would like to extend my heartfelt gratitude to MA Cao Phuong Thao and all the team members for their invaluable support throughout my internship, which greatly contributed to the successful completion of my graduation thesis.

 Thông tư 200/2014/TT-BTC ban hành ngày 22/12/2014 của Bộ Tài Chính

 Bộ Tài Chính( 2013), ‘’26 chuẩn mực kế toán Việt Nam”

 GS.TS.NGND.Ngô Thế Chi,PGS.TS Trương Thị Thủy (2010), “ Giáo Trình

Kế toán tài chính”,NXB Tài Chính

 Sổ sách, chứng từ, tài liệu Công ty TNHH Dịch vụ Đào tạo Thiên Ưng

 Website:http://ketoanthienung.net/ , https://www.investopedia.com/terms/a/accounting.asp http://danketoan.com/ …

 Graduation thesis of the previous courses.

Họ và tên người nhận xét:

Nhận xét quá trình thực tập tốt nghiệp của Sinh viên:

Khóa: Lớp: Đề tài: “Accounting for Payroll and Payroll Deduction at Thien Ung Services

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Supervisor: CAO PHUONG THAO, MSC.

Topic :” Accounting for Payroll and Payroll Deduction at Thien Ung Services

Tiêu đề	Accounting for Payroll and Payroll Deductions at Thien Ung Services Training Company Limited
Tác giả	Nguyễn Thị Hoa
Người hướng dẫn	MSC. Cao Phuong Thao
Trường học	Academy of Finance
Chuyên ngành	English for Finance and Accounting
Thể loại	graduation thesis
Năm xuất bản	2020
Thành phố	Ha Noi

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