(Tiểu luận) accounting procedures for payroll and payrolldeduction at thanh nam investment construction anddevelopment trading joint stock company

NATIONAL ECONOMICS UNIVERSITY SCHOOL OF ACCOUNTING AND AUDITING … … BACHELOR THESIS ACCOUNTING PROCEDURES FOR PAYROLL AND PAYROLL DEDUCTION AT THANH NAM INVESTMENT CONSTRUCTION AND DEVELOPMENT TRADING JOINT STOCK COMPANY Student name: Dang Khanh Huyen Student’s ID: 11182251 Class: Accounting CFAB K60 Supervisor: Assoc Prof Nguyen Thanh Hieu Ha Noi, 2022 STATUTORY DECLARATION I herewith formally declare that I myself have written the submitted Bachelor Thesis independently I did not use any outside support except for the quoted literature and other sources mentioned at the end of this paper I clearly marked and separately listed all the literature and all other sources which I employed producing this academic work, either literally or in content Hanoi, 30/06/2022 Signature i TABLE OF CONTENTS INTRODUCTION V CHAPTER 1: FEATURES OF LABOUR AND PAYROLL AND MANAGEMENT OF LABOUR AND PAYROLL AT THANH NAM INVESTMENT CONSTRUCTION AND DEVELOPMENT TRADING JOINT STOCK COMPANY 1.1 Features of labour and payroll at Thanh Nam., JSC 1.2 The form of payment for salaries and wages applied at Thanh Nam., JSC… 1.2.1 Payroll policies .4 1.2.2 The forms of payment for salaries and wages 10 1.3 Policies of payroll deduction applied at Thanh Nam., JSC 12 1.4 Features of organization of labour and payroll at Thanh Nam., JSC .15 CHAPTER 2: CURRENT SITUATION OF ACCOUNTING PROCEDURES FOR PAYROLL ANF PAYROLL DEDUCTION AT THANH NAM., JSC 18 2.1 Accounting for payroll at Thanh Nam., JSC 18 2.1.1 Accounting documents .18 2.1.2 Methods applied for payroll calculation 38 2.1.3 Accounts used 40 2.1.4 Accounting procedures for payroll 41 2.2 Accounting for payroll deductions at Thanh Nam., JSC .49 2.2.1 Accounting documents .49 2.2.2 Accounts used 54 2.2.3 Accounting for procedures for payroll deductions 55 CHAPTER 3: IMPROVEMENT OF ACCOUNTING PROCEDURES FOR PAYROLL AND PAUROLL DEDUCTIONS AT THANH NAM JSC .62 3.1 Assessing the current accounting procedures for payroll and payroll deductions at Thanh Nam., JSC 62 3.1.1 Strengths 62 3.1.2 Weaknesses 64 ii 3.2 Suggestions to complete accounting procedures for payroll and payroll deductions at Thanh Nam., JSC 65 3.2.1 Management of payroll and payroll deductions 65 3.2.2 Accounting documents and documents transfer 66 3.2.3 Conditions needed for implementing proposed solutions 68 CONCLUSION .69 REFERENCES .70 iii LIST OF TABLES Table 1.1: Group of workforce at Thanh Nam., JSC .2 Table 1.2: Working index for job titles Table 1.3: Salary for public holidays Table 1.4: Salary for personal leave Table 1.5: Other treatments Table 1.6: Percentage of payroll deductions (01/01/2021 – 30/06/2021) 12 Table 1.7: Percentage of payroll deductions (01/07/2021 – 30/09/2021) 12 Table 1.8: Percentage of payroll deductions (01/10/2021 – 30/06/2022) 13 Table 1.9: Percentage of payroll deductions (01/07/2022 – 30/09/2022) 13 Table 2.1: Labor Contract 20 Table 2.2: Timesheet of office staffs .21 Table 2.3: Payroll sheet of workers at SOJO 24 Table 2.12.4: Bonus payment sheet for New Year 35 Table 2.12.5: Advance Payment Request 37 Table 2.12.6: Detailed book (Account 334) 44 Table 2.7: General Ledger (Account 334) 48 Table 2.8: Sick leave certificate 50 Table 2.9: Social insurance section 51 Table 2.10: Payment slip 52 Table 2.11: Insurance premium sheet 53 Table 2.12: Detailed book (Account 3383) 57 Table 2.13: Detailed book (Account 3384) 58 Table 2.14: Detailed book (Account 3385) 59 Table 2.15: General Journal (Payroll deductions) 60 Table 3.1: Payroll sheet of construction department 67 iv INTRODUCTION To begin with, for every employee, wages and salaries take a significant role to apply for a vacancy at a company The remuneration is a main source of income to make up their waste labour Therefore, a reasonable income for workers needs to satisfy the basis of productivity and minimum living standards In addition, the employees take notice of salary disciplines detailed in remuneration regime in order to determine that whether or not they are fit for the job For business sector, one of the primary objectives to manage an organisation effectively and efficiently is the payroll management It is clear that the payroll focuses not only on remuneration regime but also on measure of staffs’ performance The managers will evaluate the quantity and quality of labour through the payroll for the purpose of optimizing labour costs From that point, the company can adjust the plan of staff allocation, for example, according to each product price as well as distribution and administrative costs Moreover, based on workers’ information on the payroll, the business also can prepare some contingency plans for the shortage or surplus labor events to occur In order to comprehend how payroll is created and how the use of labour ability is effective and efficient, the thesis is built with the aim of studying, analysing and assessing the accounting procedures for payroll and payroll deduction at Thanh Nam investment construction and development trading joint stock company As a result, the thesis provides some related recommendations to the improvement of the salary and salary deduction procedures The scope of the thesis consists of the Accounting Department of Thanh Nam., JSC There are three main parts involved in the thesis as following: Chapter 1: Features of labour and payroll and management of labour and payroll at Thanh Nam investment construction and development trading joint stock company Chapter 2: Current situation of accounting procedures for payroll and payroll deduction at Thanh Nam investment construction and development trading joint stock company Chapter 3: Improvement of accounting procedures for payroll and payroll deduction at Thanh Nam investment construction and development trading joint stock company v CHAPTER 1: FEATURES OF LABOUR AND PAYROLL AND MANAGEMENT OF LABOUR AND PAYROLL AT THANH NAM INVESTMENT CONSTRUCTION AND DEVELOPMENT TRADING JOINT STOCK COMPANY 1.1 Features of labour and payroll at Thanh Nam., JSC Thanh Nam., JSC actives in construction field as a subcontractor The company provides mostly construction services for a wide range of construction projects like mixed-used commercial projects, residential projects and education projects Due to the features of construction industry as well as each kind of building projects, the workforce of the company is required high standards of age, health, gender, technical level and experience As a result, Thanh Nam., JSC owns a ad-hoc labour force which comprises two types of objects: direct workers and indirect workers The direct workers often serve with short-term contracts (under one year) Hence, they not contribute for the social insurance, health insurance, unemployment insurance They are bricklayers, masons, welders, plumbers etc who incline to work as manual employees at the construction site completely In accordance with the features of this group, the criteria for the recruitment depend on significant factors such as whether the candidates are of working age (at least 18 years of age according to Labor Code 2019), whether they meet the health requirement for the job, whether they are male or female, and whether they are skilled workers Therefore, the direct labor are young mostly and in rude health Additionally, they are not required to own any professional certificate but they should have practical experience The indirect workers as management officers, quantity surveyors, quality controllors etc who work under long-term contracts so they have responsibility to participate in the social insurance, health insurance, unemployment insurance totally Furthermore, unlike direct labour, office staffs need to have specialized knowledge so they mostly graduated from related college or university They direct the implementation of a plan and manage the direct workers to ensure that the projects are performed as expected Accordingly, the office staffs can work at the company’s office or at the construction site with the direct employees For the new employees, the firm plans training programmes which are combined with a two month probationary period The seniors train for the new workers and the professional train for the new staff as well as officers to follow the set procedure very precisely Especially, the new entrant who works in the business as an apprentice are trained and evaluated carefully by the experts as the managers After the training period, individuals completing the scheme successfully would officially sign the labor contract Due to the unique features of the construction labor, the number of labor force at the company in the period from 2019 to 2021 is also interested and shown as below: No Department Indirect labour Number of employees 2019 2020 2021 18 19 21 Board of Director 5 Accounting Department 4 Admin & Human Resource 2 Department Material supply Department Construction Department Direct labour Total 329 207 426 347 Table 1.1: Group of workforce at Thanh Nam., JSC 226 447 It is noticeable that the number of human resource at Thanh Nam., JSC over the years has changed significantly For the indirect labour, there were some slight variation in the number because they signed the long-term contracts and that means they are required a high commitment to the business (motivation, loyalty and job satisfaction) In general, the quantity of indirect staffs had increased slightly by individuals over years from 2019 to 2021 However, the number of direct workers is very numerous and continuously fluctuates from year to year or evenly in a year For instance, there was a considerable decrease in the quantity of direct employees from 329 workers in 2019 to 426 workers in 2021 The major reason for this decline is that the Covid-19 situation in 2020 was turned seriously with the dramatical increase in the number of cases and the business was under orders to put a stop to all construction projects Therefore, all direct employees operating at construction sites stopped their work for a long time Until 2021, the situation returned to normal leading the return of work so the number of direct labor boost substantially 2 In addition, the number of direct labor is more volatile than indirect labor In fact, the fluctuation is influenced by the unique characteristics of construction field A construction project does not provide a stable job over the years for direct labor due to its “one-off nature” Consequently, the direct labour engaged in construction area is seasonal and migratory employed on a piece-rate basis They are essentially dedicated to farming during a certain period or climatic conditions in a year During the rest of the year, they are engaged as construction labor for intermittent short durations They not reflect their contribution in construction as an occupation Accordingly, the degree of commitment they have to the profession is not really extensive and they have little loyalty and motivation to enhance the necessary knowledge and skill of the chosen trade Due to the marked differences between the two kinds of labour, Thanh Nam., JSC has human resource management (HRM) to developing and maintaining an effective labour force which matches the business’s requirements Unlike the indirect staffs, the direct employees need to be managed in a strict and systematic way to avoid a shortage of human resources as well as to ensure cost-effectiveness Human resource department and construction department coordinates perfectly for the management of the direct workforce As a subcontractor, the company has a wide range of construction contracts as well as projects at the same time to expand the business Hence, setting up reasonable plans for rotation of the direct employees is very crucial because the managers need to take full advantage of this numerous workforce 1.2 The form of payment for salaries and wages applied at Thanh Nam., JSC 1.2.1 Payroll policies Thanh Nam., JSC institutes the payroll policies to run the payroll procedure smoothly as well as guarantee workforce of accurate and timely payment of salaries and wages The salary policies, thus, perform a huge role in maintaining the staff morale and the stability of business finance Principles for formulation of payroll In compliance with Decree 49/2013/ND-CP, the firm also sets up some principles for formulation of payroll as below Pay scale is based on the region-based minimum wage announced by the Government to adjust the salaries and wages of each job title to the finance of the company: + The lowest salary for the simplest position but not less than the region-based minimum wage + The lowest salary for the simplest position with training or apprenticeship is greater than 7% the region-based minimum wage + With the same job title, employees working in heavy and dangerous conditions will be paid at least 5% higher salary than workers working in normal conditions Because as the rule, if the enterprise with the current salaries and wages does not meet the above conditions, it will have to adjust the payroll, and the enterprises find that each year the region-based minimum wage is likely to increase, the company always sets the salary equal to or higher than the region-based minimum wage to save time as well as costs The salary fund of the company is only used for salary payment to employees working at the company and not for other purposes The salaries and wages are paid in full for employees directly and timely, according to the productivity, quality and efficiency The salaries and wages paid to the direct labor must be in line with the amount of work and not be lower than the arm’s length price The salaries and wages paid to the indirect labor must be appropriate to qualifications, commitment, competencies; degree of responsibilities of every job titles