Accounting for construction cost in tuong lan construction joint stock company

INTRODUCTION

Rationale

In response to the continuous evolution of society, the enterprise market is experiencing constant change and improvement To achieve success, businesses must effectively organize and synchronize key input factors, including production stages and business processes.

The basic construction industry plays a crucial role in manufacturing materials essential for developing technical infrastructure that supports the economy This sector encompasses buildings that are not only valuable and durable but also exhibit significant economic density and aesthetic appeal Furthermore, these structures reflect the cultural styles and lifestyles of various ethnic groups, highlighting their important sociocultural implications.

In today's rapidly evolving landscape, the urgent modernization of infrastructure across our nation necessitates effective fund management to maximize efficiency Addressing issues of waste and capital loss in the multi-stage and lengthy processes of construction is essential for optimizing resource allocation and ensuring successful project outcomes.

Effective accounting for construction costs is crucial for economic management, as it ensures accurate production cost assessment and promotes the efficient use of resources within an enterprise During my internship, I observed challenges in the timely aggregation of construction costs due to delays in data collection, exacerbated by spatial and temporal factors, which ultimately strained the capabilities of the accounting team.

Recognizing that, after a period of internship at Tuong Lan ConstructionCompany, I have chosen this topic.

Research Objective

• Apply the knowledge synthesis in university into practice and knowledge accumulated from the practice in the company.

• System and evaluate the organization of accounting for aggregation construction costs.

 Identify the strengths and weaknesses of the accounting work of the business and provide reasonable solutions to improve accounting for construction cost at the company.

Báo cáo thực tập tổng hợp

Research Methodology

1.3.1 Methods of collecting and gathering data

 Methods of collecting primary data

To investigate the accounting for construction costs at Tuong Lan Construction Joint Stock Company, I will design a comprehensive questionnaire targeting the company's employees.

Approximately 100 samples were collected from the entire staff at headquarters, including teams of accountants collaborating with the main office Additionally, I conducted interviews and observed individuals and events within the accounting department to gain a more comprehensive understanding of the operations.

This method primarily focuses on gathering sample vouchers and books related to the company's transactions, which are then integrated into information systems This process synthesizes accounting data, serving as a representative example of the company's operations By utilizing this method, the company can effectively acknowledge its presence and address any challenges it faces.

 Methods of collecting secondary data: Internet, reports, thesis, curriculum

The comparison method is widely used in operations involving significant cash transactions, ensuring a balance between debtors and associated account expenses This approach is crucial for effective decision-making, particularly in relation to decision 48.

The process of transforming into account also needs attention because ACC

632 can also unfinished products unused could leave barely works or warehouse. This may increase the actual cost of construction, which reduces the competitiveness of the company.

The collected data will be broken down into smaller problems to study Since then see highlights as well as weaknesses in the accounting work of construction

 Systematized and presented as a thesis.

Scope of research

 Overview of the issues relevant to the work of aggregation construction costs in construction projects.

 Assessment of the status of accounting for aggregation construction costs for construction work at the company.

 Giving the key solutions to save production costs and lower product costs in the company.

 Use of accounting data in June 2015 at Tuong Lan Construction Company.

 Mau Luong Preschool Project at Tuong Lan Construction Company.

 Research conducted in Tuong Lan Construction Company and Finance – Accounting Department.

Chapter 2 Theoretical framework of accounting for construction cost in enterprises

Chapter 3 Features and management of construction cost in Tuong Lan Cons, JSC

Chapter 4 Current situation of accounting for construction cost in Tuong Lan Cons, JSC

Chapter 5 Solutions and recommendations to improve accounting for construction cost at Tuong Lan Cons, JSC

THEORETICAL FRAMEWORK OF ACCOUNTING FOR

Overview of construction cost

In the construction industry, production and business activities hinge on the integration of three fundamental elements The interplay of these factors significantly influences the production process, ultimately shaping the associated costs unique to construction enterprises.

The cost of construction encompasses all expenses related to labor, both living and materialized, along with additional costs required to complete construction activities within a specified timeframe.

Figure 1.1 Model of construction cost

Effective cost management is crucial for businesses, as it involves categorizing expenses based on specific needs and purposes Different classifications of costs serve distinct functions in management, accounting, and cost control, allowing for more detailed information By organizing expenses according to various criteria, businesses can better identify opportunities to reduce costs, enhance efficiency, and improve accounting practices, particularly in the construction sector.

Through internship time, I found that construction costs mainly classify by the use of cost and product cost of construction items.

- Direct materials cost: means the value of the raw materials, secondary raw materials, fuel used directly for the construction and installation, such as iron, steel, cement, sand, stone, brick

Direct labor costs encompass the salaries, allowances, and other payments made to construction workers directly involved in a project These costs specifically exclude any deductions for social insurance, unemployment insurance, or labor union fees associated with the workers.

The costs associated with construction instruments encompass various expenses, including fuel, worker wages, and allowances for operating machinery Additional factors include depreciation, maintenance, and repair costs for construction machines It's important to note that these costs do not account for deductions related to social insurance, unemployment insurance, or labor union fees for the workers involved in controlling and servicing the equipment.

Overhead costs in construction encompass various management expenses incurred on-site, including wages for construction management personnel, costs for tools and supplies, makeshift camp expenses, utilities like electricity and water, communication fees, technical documentation, as well as deductions for social and unemployment insurance and labor union fees Additionally, these costs cover worker supervision and the maintenance of construction machinery, contributing to the overall management of the construction project.

Overhead cost includes variable costs and fixed cost.

Variable costs are those costs change in total when there is a change in the volume of activity.

Fixed cost is the cost of production did not change in total when there is a change in the volume of activity.

Effective management of construction costs relies on accurate estimates, as construction activities and works are essential components of the industry Conducting independent estimates prior to commencing construction is crucial for organizing expenses effectively.

Accounting for construction cost

Construction projects are multifaceted and intricate, featuring unique characteristics such as the production of various high-value materials from different locations These projects often involve lengthy timelines and may include direct construction or subcontracting processes.

The production costs of construction projects are defined by specific parameters and limitations that encompass various factors These costs are influenced by the characteristics of the construction activities, the management level, and the production requirements Key elements that contribute to construction and installation costs include the production team, the location of the work, and the specific stages of the construction process Additionally, the workload can be tailored to accommodate individual technical specifications and requirements.

- Accounting for construction costs under Vietnam accounting standards:

 Standard 01: General standard – Ministry of Finance

The matching principle dictates that revenue recognition must align with corresponding expenses incurred in generating that revenue This includes costs directly tied to sales, as well as expenses from previous periods that relate to current sales If these costs are inaccurately represented, it can lead to misleading financial statements.

Costs include production costs, incurred during the normal business operations of the business and other expenses.

The precautionary principle dictates that expenses should only be recognized when there is clear evidence of their potential to generate costs This evidence, rooted in accounting documentation, forms the foundation of accurate cost accounting Without such evidence, financial records may lack integrity, resulting in misleading representations of a business's operations Expenses are recorded in the statement of operations when they diminish future economic benefits, either through asset reductions or increased liabilities, provided there is a reliable method for identification.

 Standard 02: Inventories – Ministry of Finance

Construction costs encompass various expenses directly tied to the construction process, including direct materials, direct labor, construction equipment, fixed overhead costs like machinery depreciation, and variable overhead costs such as indirect materials and labor Additionally, standards account for costs not included in building product pricing, which consist of materials, labor, and other typical expenses incurred during construction.

 Standard 03: Tangible fixed assets – Ministry of Finance

This standard outlines the principles and accounting methods for managing tangible fixed assets, particularly in the construction sector During the construction of a building, businesses utilize significant machinery and valuable assets, which are subject to considerable wear and tear over time As a result, it is essential for enterprises to accurately calculate and allocate reasonable depreciation costs to ensure precise accounting and optimize business effectiveness.

Businesses can utilize one of three depreciation methods for fixed assets: the straight-line method, the declining balance method, or a product-based approach The useful life of tangible fixed assets is primarily determined by estimated usage, but companies may set this period shorter than the actual lifespan due to their asset management policies Thus, estimating the useful life based on industry experience for similar assets is essential Additionally, during construction, businesses may encounter repair amortization or the liquidation and sale of fixed assets Therefore, it is crucial for companies to systematically monitor and manage their assets to ensure efficient usage.

 Standard 15: Construction Contract – Ministry of Finance

This standard specifies the principles and cost accounting methods in construction contract Cost of construction contracts include:

Costs associated with each contract include direct labor expenses for on-site work supervision, depreciation of machinery and equipment utilized in contract execution, and transportation costs for installation and dismantling activities.

The comprehensive internship report is closely linked to the contract, encompassing design and technical assistance costs associated with it Additionally, it includes estimated expenses for repair and maintenance work, as well as other relevant costs.

Overhead costs associated with construction contracts encompass various expenses, such as insurance, design, and technical assistance not tied to a specific project, as well as general management costs These expenses are systematically allocated to each project using an appropriate method, ensuring a consistent application of reasonable rates to all costs with similar characteristics.

Under the terms of the contract, additional costs may be charged to the customer, including expenses related to site clearance and implementation costs that the customer is obligated to reimburse to the contractor.

Expenses unrelated to the contract's operation or not directly tied to construction contracts are excluded from construction costs Such expenses encompass general administration, research and development costs not specified for customer payment, sales costs, and depreciation of machinery and fixed assets not utilized in construction The costs included in the contract cover all expenses incurred from the contract's signing to its completion.

When the cost of construction contract recorded 2 cases:

Contract provisions dictate that contractors are compensated based on the planned work schedule, with costs recognized in proportion to the work completed by the contractor as of the financial statement date This recognition is independent of the invoiced amounts or the progress made according to the initial plan.

Contract provisions dictate that contractors receive payment based on the value of completed work Customer confirmation of charges associated with the contract is recognized in proportion to the work completed This acknowledgment is reflected in the invoices generated during the specified period.

- Accounting for construction costs under current accounting regime applicable Circular 200 – Ministry of Finance

Most commonly applied business inventory accounting method perpetual. This method has many advantages and is suitable for business and production characteristics of enterprises.

Vietnam's accounting standards are now governed by Circular 200 from the Ministry of Finance, which outlines the accounting regime for small and medium-sized enterprises, specifically detailing the structure of production costs.

FEATURES AND MANAGEMENT OF CONSTRUCTION

Overview of TUONG LAN CONS, JSC

Tuong Lan Construction is directly under Ha Noi Department of Planning and Investment, established in August 6th, 2010

 Company Transaction Name: Tuong Lan Construction Joint Stock Company

 Address: No 93A, Ha Tri, Ha Cau Precinct, Ha Dong District, Ha Noi City

 Supervise construction, bridge design, design lines and substations

 Services related to printing, publications

 Wholesale material, other equipment installed in the building

 Contract processing industries serving the needs within and outside the city.

 Construction publications bring high distinctiveness; diversity of uses, composition and manufacturing methods Products built for single as dependent on orders from investors, geography, geology, where construction works.

Investing in construction projects requires careful planning and analysis, as these buildings are significant investments with long construction periods and extended usage It is essential to conduct thorough site selection, surveys, and design assessments before commencing construction to minimize the risk of costly delays, repairs, and potential damage that could shorten the project's lifespan.

 Construction products usually have size, great weight Number of types of

So the cost of construction products are complex, frequently changed by factors impact on.

 Construction products related to multiple industries both in terms of providing inputs, design and manufacture of products, both in terms of use of the building.

 Construction products related to landscape and natural environment, so much related to the interests of the community, especially to the local residential construction.

Figure 3.1 Process of producing constructions

The relationship between material expenditures and productivity is crucial, as innovations in design and management can enhance consumption efficiency through the use of advanced materials and technologies With the rapid advancement of the scientific and technical revolution, the introduction of modern technologies and new materials is replacing outdated ones Enterprises that effectively integrate scientific advancements and cutting-edge technologies into their production processes can significantly boost labor productivity, reduce material and fuel consumption, lower costs, and ultimately enhance profitability.

Máy ủi, máy xúc, máy đầm

Gạch, cát, xi măng, vôi

Xi măng, cát, đá, sắt

Sản phẩm xây dựng thô

Characteristics of construction cost at Tuong Lan Cons, JSC

Construction is a key manufacturing sector that establishes the material and technical foundation for the national economy It plays a vital role in enhancing the economic structure and lays the groundwork for the country's industrialization and modernization efforts.

However, the construction industry has unique characteristics different from other industries affect the management and accounting.

Construction products refer to architectural works or large-scale structures that are intricately designed and constructed Each product is developed based on specific designs and technical specifications, accompanied by individual price estimates Before production begins, it is essential for manufacturers to compare the actual designs with the estimates, as these estimates serve as a benchmark for measuring the project's progress and cost efficiency.

Construction products are often undervalued or priced lower than the actual cost incurred by contractors, with their value typically established before production through co-bid contracts Conversely, certain construction products are not traded in the market, indicating a unique relationship between their production and consumption, thus categorizing them as commodities with distinct characteristics.

The construction of products involves a lengthy process and significant investment, necessitating construction companies to meticulously assess the quality of their work This diligence is essential to ensure that projects meet design specifications and maintain their longevity.

The organization of accounting significantly impacts the aggregation of production and construction costs for products with specific characteristics To enhance its effectiveness as an economic management tool, accounting in the construction sector must align with the unique production and business characteristics, as well as the manufacturing process technology of construction products, while strictly adhering to the accounting regulations established by the State.

Management and mission of accounting for construction cost

Construction cost accounting and product cost accurately and timely is the key condition to determine business performance.

Director, check the cost in order to save costs and lower the cost of the primary goals of the enterprise in the market mechanism.

Effective business management relies on precise accounting of production costs and robust product cost management systems These tools enable businesses to regularly assess their financial situation, guide production and operational decisions, and analyze overall performance Additionally, understanding price indices is crucial for establishing competitive pricing strategies.

In summary accounting construction costs and product prices have an important effect in the management of the business, especially in matters of corporate governance.

3.3.2 Mission of construction cost accountant

To promote the role of the accounting for construction cost in the current conditions accountants must perform the following tasks:

1 Determine the object of aggregation construction costs and organize aggregation costs in accordance with the object.

2 Determine the exact cost of the unfinished products in ending

3 Record; accurately and fully reflect the actual costs incurred during production => Check the implementation of the cost norms, the cost estimates in order to lower the cost of products.

4 Perform analysis of the costs, price => serving the accounting statements Báo cáo thực tập tổng hợp

CURRENT SITUATION OF ACCOUNTING FOR

Accounting for direct material cost

Characteristics of direct material cost

Tuong Lan Construction, JSC prioritizes effective management and accounting processes for the procurement, transportation, preservation, storage, and utilization of materials, as material costs constitute the largest portion of overall project expenses.

The company offers a diverse range of materials tailored for various applications To effectively manage and organize both general and detailed accounting in alignment with production requirements, it is essential to classify materials based on their economic characteristics and the impact of each category.

Raw materials, primary materials mainly include: asphalt, brick and steel, cement, yellow sand, black sand accounted in ACC 1521.

Auxiliary materials mainly include: concrete admixtures, wood, carbide, oil accounted in ACC 1522.

Semi-finished material is recorded into ACC 1523.

Structural materials, recyclable materials accounted in the ACC 153.

In the construction industry, material costs significantly impact project budgets, making raw material reserves crucial for capital accumulation However, managing and maintaining a warehouse for these materials can be complex and expensive Consequently, many companies opt not to maintain a traditional inventory system based on stock cards, instead tracking materials according to the specific needs of their construction projects.

 Payment in advance, payment bills

Each month, the planning department conducts production planning based on approved design documents and cost estimates, assigning tasks to the implementation team This team manages projects by writing supply proposals according to their assigned plans and actual on-site volumes The materials department then creates output vouchers based on these proposals, which must be signed by the director, chief accountant, and storekeeper The officer hands over the output vouchers to the storekeeper, who releases the materials accordingly Weekly, storekeepers submit output vouchers to the company to track supply costs for construction teams Additionally, material accountants prepare a monthly list of output vouchers for specific works, which is used to aggregate documents for bookkeeping This information is then transferred to the inspection chief accountant and allocated to the general accountant for ledger recording.

621, detailed book for each submit.

Based on the demand for actual supplies at work, companies buy supplies. Sellers deliver and VAT invoices to the company after the company pay or accept payment.

Date: 04/06/2015 Selling Name: Thanh Do Development Construction JSC

Company Name: Tuong Lan Construction JSC

Address: Ha Dong, Ha Noi

No Description Unit Quantity Unit Price Amount

VAT rate: 10 % Amount VAT: 18,716,650 Total: 205,883,150 Total in words: Two hundred and five million eight hundred eighty three one hundred fifty thousand

(Sign, full name.) (Sign, full name.)

No 93A, Ha Tri, Ha Dong, Ha Noi

Invoice No 0000230 date 04/06/2015 of Thanh Do Development Construction JSC Stock: No 93 A, Ha Tri, Ha Dong, Ha Noi.

Total in words: One hundred eighty seven million and one hundred thousand sixty six and five hundred VND.

- Detailed: To serve Mau Luong preschool project

Total in words: One hundred eighty seven million and one hundred thousand sixty six and five hundred VND.

Based on the source of documents (delivery bill: Form 02-VT) moved down by supplies department, Accounting – Finance department makes lists to keep track output vouchers completely

93A,Ha Tri, Ha Dong, Ha Noi

DETAILED BOOK ACC 621- Cost for direct raw materials

Month 06 year 2015 Project: Mau Luong Preschool

30/6 30/6 Transfer cost for direct materials 154 239.614.100

Date 30 month 06 year 2015 Preparer Chief Accountant Sign Sign

Code S03b – DN (Circular 200/2014/TT_BTC in 22/12/2014 Ministry of Finance)

- Based on the source of documents, accountant sets materials allocation table for projects as following form:

No Object ACC 152 Total ACC

I ACC 621: Cost for direct raw materials

ACC 623:Cost for production instruments

-Based on materials allocation table for the projects at each cost items, accountant prepares documents for book entry as following form:

06/2015 Materials stock delivery for objects 152

Preparer Chief Accountant Sign Sign

- Based on established documents for book entry, accountant records the relevant ledger To track cost for direct materials, accountants records Ledger account 621 as following:

Documents for book entry Description Ref

30/06 135 Cost for direct raw materials 152 884.028.073

Transfer: Cost for direct raw materials 154 884.028.073

Accounting for direct labors cost

Characteristics of direct labors cost

In the construction industry, particularly for Tuong Lan Construction Joint Stock Company, direct labor costs represent a significant portion of overall product expenses These costs are calculated based on the specific project and work items, contributing to the total product cost of the facility.

 Salaries and substances wages amounts

 Salary paid for outsourced workers

Currently, Tuong Lan Company is applying two forms of payment: time wage form for office staffs, production management and piece wage form for direct production workers.

The time wage system is utilized in the production management department and among workers when there is no contracted volume This wage structure is determined by the rank of officers and employees, taking into account the actual number of working days within the month.

Piece wage payment is primarily applicable to workers directly involved in production, making it a prevalent and effective compensation method This system allows for individualized salary calculations for each employee, accommodating both groups of workers and overall output Wages in this format are determined using a specific formula, ensuring fair compensation based on productivity.

Basic wage x Coefficient Number of working day (24)

Payable Wages = Actual working days

- Wage Allocation Table and Social Insurance

Last month, leaders reviewed the construction accounting timesheets, while accounting teams submitted salary vouchers from their respective units for payment processing The company's accounting department relies on the volume of work completed and the acceptance tests of these salary vouchers to facilitate accurate payments.

In the last quarter, the company analyzed payment volumes for each team to compile a comprehensive table of employee wages, which were allocated to the direct labor costs associated with each project.

Based on the provisional salaries for contracted workloads and working hours, the unit wage for a workday has been established Last month, using the completed volume, timesheets, and unit wage, the salary accountant calculated and tabulated the wages to determine the total amount paid to employees.

Upon completion of contracted work, testing teams verified that the workload was fully accomplished The certificate of completion includes workload statistics, as the accounting staff collaborates with the technical department to validate the volume of construction completed The board then confirms that the finished work is handed over to the accounting department for cost inspection and accounting purposes.

Based on the timesheets, job confirmation slip completed, accounting tabulated wage for each worker sharing formula available.

Every month, the accounting basis of the salary table of the group split up construction allocation table wage and salary deductions

Here are some sample documents that Tuong Lan company use for recording direct labor costs:Báo cáo thực tập tổng hợp

Month 06 year 2015 Construction team 1: Mau Luong Preschool Project

No Full Name Position Week day

Basic Wage Total Advance Remain Sign

By words: Thirty two million and fifty thousand Viet Nam dong

No Part Wage Allowance Total Advance Remain Note

Date 30 month 06 year 2015 Preparer Accountant Director

ALLOCATION WAGES AND SOCIAL INSURANCE

Based on the source of documents (Wage payment tables), accountant records detail book ACC 622 to track cost of direct labors for each project.

DETAILED BOOK ACC 622 Month 6 year 2015 Mau Luong Preschool Project

Cost of direct labors in June

Arising amount Transfer cost of direct labors

Basing on documents for book entry, accountant records relevant accounts To keep track cost for direct labors, he or she records Ledger 622 as following:

Documents for book entry Description Ref.

30/6 150 30/6 Cost for direct labors in Mau Luong Preschool Project

Transfer: cost for direct labors

Accounting for construction instruments cost

Characteristics of construction instruments cost

Tuong Lan Company's construction instrument costs encompass various expenses, including salaries and wages, operational worker costs, material expenses for executing machines, depreciation of fixed assets, repair expenses for executing machines, and additional miscellaneous expenses.

Tuong Lan Construction Joint-Stock Company utilizes a range of machinery, including concrete mixers, road rollers, tampers, excavators, shovels, pile drivers, rock transporters, and asphalt equipment, which are allocated to construction teams for effective management under the supervision of the relevant department To maintain construction progress, teams may need to lease additional machinery, requiring them to sign a "Construction Instruments Leasing Contract." Upon contract expiration, a "Construction Instruments Leasing Record" must be completed, serving as the basis for accountants to prepare financial records.

To proceed with the leasing process, ensure that the leasing fee is paid Collect all necessary machines specific to each building and its category It is important that specialized accountants do not record the execution costs in the accounts; instead, they should compile relevant documents for the general accountants.

Required documents to enter construction instrument cost in the accounts:

However, in June, company only generates few documents, which is construction instruments depreciation spreadsheet as following:

Construction team 01 – Mau Luong Preschool Project

Basic depreciation deducted in month

 Export tools and supplies for construction instruments.

 Depreciation of construction instruments for construction projects

Tuong Lan Company offers rental services for construction machines without operator control and servicing In such cases, the company compensates the lessee with a predetermined contract amount, which includes depreciation rates based on machine usage norms and the applicable machine management ratios.

Renting construction machines involves managing both the workforce and the equipment This includes accounting for depreciation, as well as evaluating the cost ratios related to management and public service expenses.

Tuong Lan Company offers machine rentals based on workload, allowing corporations to pay only for the completed unit of work Companies typically rent construction vehicles and machinery on an hourly or monthly basis When hiring vehicles, factory workers often engage drivers, ensuring that both the factory and the company meet fuel requirements for operation Additionally, the lessor is responsible for covering other expenses, such as repair costs for the construction machines.

Simultaneously with the detailed book, monthly based on original documents after checking and comparing the data recorded on the aggregate table, detailed book, documents for book entry.

To effectively manage construction costs, it is essential to utilize relevant documentation such as materials allocation tables and depreciation schedules for construction instruments Accountants should maintain detailed records in ACC 623 to meticulously track the costs associated with construction instruments for each project.

30/6 167 30/6 Cost for construction instruments in June

Transfer Cost for construction instruments

Base on documents for book entry, accountant records Ledger ACC 623:

Documents for book entry Descriptions

Cost for construction instruments in Mau Luong Preschool Project

Transfer cost for construction instrument

Accounting for overhead cost

Overhead cost in construction enterprises is direct cost incurred in the production process of construction, overhead cost include:

- The cost of wages and other payable substances wages amounts for management staffs, teams of construction.

- The cost of materials, tools used in teams of construction.

- The cost of services purchased from outside in common service of teams construction.

- The other cost by cash.

- Materials, Instruments and Tools Allocation Tables

- A list of invoices and vouchers buying materials do not enter the stock and put to use immediately in production

- Spreadsheets and allocated depreciation tables

General production costs of Tuong Lan Cons, JSC are including:

- Wage of Construction team managers

- Social Insurance, Health Insurance, Labor Union Fee deducted 20% of payable wage

The total cost of production includes not only the expenses for construction instruments but also the overhead costs, which are recorded in the accounting entries This encompasses the allocation of materials, wages, and other financial aspects such as cash, bank deposits, and advances All these elements contribute to the overall production cost, which is systematically documented in the general accountant's ledger, specifically under ACC 627.

- General production cost related to constructions, work items is gathered

The wage calculation for the construction team manager follows a timely wage method, utilizing timesheets submitted by the department This approach ensures a fair distribution of each construction team's salary fund, leading to the establishment of payrolls for the management department in accordance with the prescribed format.

Monthly, basing on source of documents, accountant records detailed book construction team by every cost items.

Social insurance and health insurance deductions are calculated based on employee positions, excluding labor union fees from the total salary fund These deductions are categorized into specific items and compiled for bookkeeping and ledger purposes The defined rates are 26% for social insurance, 4.5% for health insurance, and 2% for unemployment insurance.

Month 6 year 2015 Department Steering Committee: Mau Luong Preschool Project

No Full Name Position Week

Unit Price Wage Total Advances Remain Sign

By words: Twelve million and seven hundred thousand VND.

TT Department Wage Allowance Total Advances Remains Note

Basing on salary allocation Table in June 2015 accountant deducts social insurance for management teams of Tuong Lan company as follow:

DEDUCTION SOCIAL INSURANCE LIST IN JUNE, 2015.

Basing on source of documents, accountant records detailed book ACC 627:

Mau Luong Preschool Project Month 6 year 2015

Transfer: Cost for general production

Basing on Salary Payment Tables, Deduction Social Insurance Lists, and accountant records documents for book entry:

30/6 Cost of construction steering committee wage

Basing on documents for book entry, Accountant records Ledger ACC 627:

Document s for book entry Descriptions Ref.

Allocation deduction wage insurance of Steering Committee

Transfer Cost of general production

Accounting for total production cost

Characteristics of total production cost

Production cost of Tuong Lan Company is aggregate according to each construction project and each cost item: direct materials, direct labor, instruments & tools, general production costs.

Construction costs exclude administrative expenses, which are essential for project execution and transferring works to investors Investment costs, operating finance expenses, and irregular expenses are also not part of production costs Costs related to various accounting periods should be allocated based on rational criteria Initially, production costs serve as a cost factor, later categorized as product cost items All costs must be recorded in accounting books upon occurrence, supported by invoices and vouchers, as evidence of cost generation capability Costs incurred during construction or public works are allocated to those specific projects.

When gathering costs and product costs, to perform accurately, to follow easily, accountant must base on evidences arising from accounts used.

- Accounting documents is the proof for the economic activity occurs, the media about the financial and economic activities arising and order completion and the basis for recording accounting books.

Specifically, the services incurred during the construction should have documents such as output vouchers, timesheets, labor contracts, the value-added invoices, retail invoices

- Tables of product cost of each projects

In the final period, the company assesses the completed work costs by tallying the monthly incurred expenses, which include direct material costs, direct labor costs, construction machinery costs, and overhead expenses.

In the company, direct costs such as the cost of materials, direct labor

The comprehensive internship report details the costs associated with each project component By tracking expenses from the project's inception to its completion, it allows for accurate accounting of the total costs incurred for each item This method of cost collection facilitates a more efficient and precise costing process.

Accountant bases on documents gathered above to conduct product costing card to as follow:

Mau Luong Preschool Project Month 6 year 2015

Ending W.I.P Total Cost Unit Price

Basing on aggregated documents, accountant records in detailed book and ledger ACC 154 as follow:

DETAILED BOOK ACC 154 - Cost for working process Mau Luong Preschool Project

Document s for book entry Description Ref.

30/6 111 30/6 Transfer cost of direct materials

30/6 124 30/6 Transfer cost of direct labors

30/6 135 30/6 Transfer cost of construction instruments

LEDGER ACC 154: Cost for working process

Document s for book entry Descriptions Ref.

30/6 111 30/6 Transfer cost of direct materials

30/6 124 30/6 Transfer cost of direct labors

30/6 135 30/6 Transfer cost of construction instruments

SOME RECOMMENDATIONSTO COMPLETELY MANAGE

Accounting for construction cost

The aggregation of production costs and the determination of object aggregation costs are essential for effective management at Tuong Lan Company This approach ensures clarity and simplicity in tracking costs for each set of works and work items over time Additionally, it facilitates efficient management of production and business operations while maintaining accurate inventory records of completed constructions, ultimately providing timely and precise data on work product costs.

Advantages and disadvantages in accounting for construction cost at

5.2.1 Advantages in accounting for construction cost

Tuong Lan Company emphasizes effective labor management by implementing fair incentives and a balanced system of rewards and punishments, fostering a positive work environment through extracurricular activities The company prioritizes promoting employees with knowledge and experience, ensuring that local labor resources support the construction process while managing labor costs effectively Tailored employment arrangements enhance individual interests and motivation, contributing to overall productivity.

Purchase of materials delivered right to work to reduce warehousing costs, go to the production team to ensure continuity of production and limit wastage and loss.

5.2.2 Disadvantages in accounting for construction cost

Cost control in the construction industry is challenging due to fluctuating material and fuel prices that often exceed initial estimates, leading to significant obstacles To address this, companies can submit reports to request subsidies Throughout the project, the company calculates temporary production costs and final actual costs However, the payments for completed work are typically lower than the actual incurred costs, creating financial discrepancies.

Reality often disrupts well-constructed plans, as environmental factors like flood seasons and depressions necessitate additional resources such as rock elements and fuel Conversely, certain regions may experience reduced fuel needs due to high terrain Additionally, rising material costs can further hinder construction progress.

Losses in the construction process, whether subjective or objective, are often not adequately tracked by accountants, leading to a slow identification of responsible parties This lack of tracking fails to accurately reflect production costs for the reporting period, which directly impacts overall construction expenses.

For the transfer of documents:

The slow processing of transfer vouchers results in significant delays, ultimately impacting the accuracy of accounting information and hindering effective leadership in driving business outcomes.

For cost items, accounting also has some shortcomings, such as:

Currently, materials are sourced individually for each project and delivered to ongoing sites, which can disrupt the supply chain This approach often leads to challenges in meeting the raw material demands for various construction tasks, especially since many projects are located far from suppliers Consequently, this inconsistency can hinder the timely completion of construction projects within the company.

The direct labor costs at Tuong Lan Company encompass direct production expenses, labor for controlling construction machines, and other direct departmental costs However, the costs associated with controlling construction machine labor are not recorded under ACC 623, leading to an increase in overall direct labor costs and a decrease in construction instrument costs While this does not directly impact cost calculations, it alters the structure of production costs and affects the cost percentage, complicating the monitoring and analysis of production expenses and product costs, and hindering efforts to develop plans for reducing production and product costs.

As mentioned above, recording cost for control construction machine labors into ACC 622 without recording into ACC 623, which reduces the cost for construction instruments

Not opening sub-accounts (such as 6231, 6232, etc.) complicates accounting oversight and cost management This lack of detailed tracking hinders efforts to reduce expenses and lower product costs effectively.

The costs associated with construction instruments and general production at Tuong Lan Company may not be itemized in detail within sub-accounts for professional and economic depreciation of fixed assets, as they are primarily recorded under account ACC 627 While this practice does not alter the overall general production costs, it impacts the structural analysis of cost items, which is essential for the company's goal of cost reduction and lowering product expenses.

Recommendations to complete production cost accounting at Tuong Lan

Following my internship at Tuong Lan Cons, JSC, I applied the theoretical knowledge gained from university to address existing challenges in the company's management and accounting of production costs Based on my observations and insights, I have compiled several key recommendations for improvement.

Tuong Lan Company faces significant challenges in document transfer due to its extensive operational areas, leading to delays in the completion of construction team documents The remote and difficult travel conditions contribute to this issue, causing team leaders to often finalize invoices only at the end of the month or quarter These delays adversely affect accounting processes and the accuracy of financial information, ultimately impacting the company's production and business activities.

Companies should require construction teams to obtain completion certificates by implementing a set of provisions linked to fulfillment voucher forms derived from company securities This approach ensures that teams are adequately prepared with materials and manpower, even when documentation is limited To facilitate this process, the company can establish regulations that mandate teams to complete specific vouchers before receiving subsequent advances, thereby streamlining project execution and compliance.

Secondly, for the cost items have some shortcomings as mentioned above I have some recommend that:

The use of stock materials can disrupt supply and delivery processes To address this issue, the company should empower production teams to procure materials directly It is essential to document the source of these purchases, including purchase invoices and delivery records Additionally, on-site minutes should be created to ensure proper tracking, allowing for the accurate transfer of invoices and accounting records to maintain compliance with legal requirements for accounting documentation.

Effective accounting practices are crucial for a company's financial integrity, as they allow accountants to accurately track the total costs of raw materials used in construction without relying on receipt notes or delivery notes.

Direct labor costs, including those associated with construction machines and other departments, can complicate a company's cost structure, making it challenging to monitor, analyze, and manage production costs and product pricing To address this issue, the company should consolidate machine control costs into direct labor costs (ACC 622), rather than categorizing them under machine costs (ACC 623), in accordance with the appropriate accounting entries.

Debit ACC 622: Wages of direct labors

Besides the accounting of the expense item, the fostering qualified accountant is also an important issue

To effectively transition from manual accounting to automated systems, companies must invest in training their qualified accounting staff, ensuring they are proficient in using modern accounting machines This training not only enhances their skills but also enables better management of cost analysis, allowing firms to identify key factors that positively impact product costs By doing so, businesses can pinpoint areas for cost savings and implement strategies to reduce construction expenses, ultimately leading to more efficient financial operations.

In today's competitive market economy

During my internship and thesis preparation, I focused on enhancing my understanding of business accounting, with particular attention to accounting for production costs and the current costing and accounting systems implemented in our country.

With the invaluable support and dedication of my teachers, particularly the heartfelt guidance of PhD Le Kim Ngoc, along with the encouragement from my colleagues in the Finance and Accounting Department at Tuong Lan Company, I successfully completed my graduation thesis.

"Improving aggregation production cost accounting in Tuong Lan Construction Joint Stock Company "

Despite my efforts and the limited practice time available, this article addresses only the most fundamental issues and offers initial observations I acknowledge that there may be oversights and shortcomings, and I welcome constructive feedback from my teacher to enhance the quality of my work.

I would like to extend my heartfelt gratitude to Dr Le Kim Ngoc for her invaluable guidance in completing this thesis I also appreciate the support from my colleagues in the Finance and Accounting Department, as well as from other departments at Tuong Lan Construction Joint Stock Company.

1 PGS.TS Phạm Văn Dược (2006) Kế toán quản trị Nhà xuất bản Thống kê, TP HCM

2 TS Phan Đức Dũng (2006) Kế toán chi phí và tính giá thành Nhà xuất bản Thống kê, TP HCM

3 TS Võ Văn Nhị, ThS Huỳnh Lợi, ThS Nguyễn Khắc Tâm (2002) Kế toán chi phí Nhà xuất bản Thống kê, TP HCM

4 Nguyễn Anh Tuấn (2010).Hướng dẫn thực hành – Lập, luân chuyển chứng từ và ghi sổ kế toán doanh nghiệp.Nhà xuất bản Đại học Kinh tế quốc dân, Hà Nội

5 PGS TS Nguyễn Thị Liên, PGS TS Nguyễn Văn Hiệu (2009), Giáo trình thuế, Nhà xuất bản Học viện tài chính.

1 Kurt Pany (Fifth edition), “Intermediate Accounting”, McGraw-Hill Irwin

2 O Ray Whittington (Fourth edition), “Principles of Auditing & Other Assurance Services”, McGraw-Hill Irwin.

3 Jeffrey J Archambault, “Accountant in Business”, BPP Learning Media.

4 Ministry of Finance, Decision No.15/2006/QD-BTC effective on 20 th March, 2009

PHIẾU ĐIỀU TRA ĐƠN VỊ THỰC TẬP Tên công ty: Công ty Cổ phần xây dựng Tường Lân Địa chỉ: Số 93A, Hà Trì, Hà Cầu, Hà Đông, Hà Nội

Sinh viên thực hiện: Phan Ngọc Anh

Lớp: Kế toán tiên tiến 54A

Khoa Kế toán tiên tiến, trường Đại học Kinh tế quốc dân

Cảm ơn quý công ty đã hỗ trợ và hướng dẫn tôi trong quá trình thực tập Để nâng cao chất lượng và tính xác thực của thông tin cho khảo sát chuyên sâu và hoàn thiện bài khóa luận tốt nghiệp, xin quý ông (bà) vui lòng trả lời các câu hỏi dưới đây bằng cách đánh dấu vào các ô trống.

1 Mô hình tổ chức bộ máy kế toán của đơn vị là hình thức nào?

 Mô hình kế toán tập trung

 Mô hình kế toán phân tán

 Mô hình kế toán vừa tập trung vừa phân tán

2 Đơn vị hạch toán hàng tồn kho theo phương pháp nào?

3 Phương pháp tập hợp chi phí sản xuất của đơn vị áp dụng thống nhất không?

4 Thời điểm tập hợp chứng từ kế toán về trụ sở chính từ các công trình thi công là khi nào?

 Tùy vào thời điểm kế toán công trình về trụ sở chính.

5 Phương thức thanh toán công ty áp dụng khi mua vật liệu và các chi phí khác liên quan đến công trình là gì?

 Thanh toán trực tiếp bằng tiền mặt

 Thanh toán qua ngân hàng

6.Công ty nộp thuế GTGT theo phương pháp nào ?

Tiêu đề	Accounting For Construction Cost In Tuong Lan Construction Joint Stock Company
Tác giả	Phan Ngọc Anh
Người hướng dẫn	PhD Lê Kim Ngọc
Trường học	National Economics University
Chuyên ngành	Accounting
Thể loại	thesis
Năm xuất bản	2016
Thành phố	Hanoi

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