Completion of accounting for revenua and costs in construction contract in ho chi minh meseum construction joint stock company,graduation thesis

BANKING ACADEMY ACCOUNTING FALCUTY GRADUATION THESIS COMPLETION OF ACCOUNTING FOR REVENUE AND COSTS IN CONSTRUCTION CONTRACT IN HO CHI MINH MUSEUM CONSTRUCTION JOINT STOCK COMPANY Student : Pham Hong Hanh Class : K19-CLC-KTA Student ID : 19A4020215 Course : 2016 - 2020 Instructor : PhD Nguyen Bich Ngoc Ha Noi, May - 2020 COMMITMENT I assure that I have done this graduate thesis, the analytical data in the subject is accurate and truthful, and all references from other sources are correctly cited and comprehensive in field of inquiry Please take responsibility for this graduate thesis Student Pham Hong Hanh i ACKNOWLEDGEMENTS I would like to express my sincere gratitude to Ho Chi Minh Museum Construction Joint Stock Company for letting me to finish my internship course at the late of 2019 and from April to May 2020 here and provided me a lot of information about the company Besides, I also say thank my supervisor, Ms Tran Thi Hoa – chief accountant of the company who was willing to answer all question for my thesis It was a pleasure working with her and I was able to develop myself with such support and encouragement In addition, I am simultaneously graceful to Banking Academy, especially the Accounting department I would love to show my appreciation to all teachers who have taught me for years in Banking Academy for their passionate on conveying knowledge to students, during all of your school studies, particularly during the writing of this thesis The knowledge gained in the learning process not only helps me to achieve good results in this career phase, but also as a tool to help me get more confident and comfortable into my life The study might have some shortcomings, I would love to receive constructive feedback to help me to supplement, fix and improve Moreover, I am still profoundly indebted and truly grateful to PhD Nguyen Bich Ngoc, my instructors for always being there during my thesis writing for continuous guidance, useful advice, compassion, patience and encouragement Lastly, I would like to express my deepest gratitude to my family and friends have always been a tremendous source of support and inspiration for me during this course ii TABLE OF CONTENT COMMITMENT i ACKNOWLEDGEMENTS ii TABLE OF CONTENT .iii LIST OF ACRONYMS vi LISH OF TABLE AND ILLUSTRATION vii INTRODUCTION CHAPTER THEORETICAL BASIS FOR ACCOUNTING FOR REVENUE AND COSTS IN CONSTRUCTION CONTRACT 1.1 Overview on construction industry 1.2 Overview on construction contract 1.2.1 Definition 1.2.2 Classification 10 1.3 Accounting for revenue and costs in construction contract 13 1.3.1 Accounting for revenue 13 1.3.2 Accounting for costs 17 1.3.3 Presentation of revenue and costs on financial statement based on VAS 15 23 CHAPTER CURRENT ISSUES OF ACCOUNTING REVENUE AND COSTS OF CONSTRUCTION CONTRACT IN HO CHI MINH MUSEUM CONSTRUCTION JSC 25 2.1 Overview of Ho Chi Minh Museum Construction JSC 25 2.1.1 Formation and development 25 2.1.2 Main activities 26 2.1.3 Organizational structure 26 iii 2.1.4 Some performance indicators of the Company 28 2.2 Organizing accounting work at Ho Chi Minh Museum Construction JSC 29 2.2.1 Organizational accounting department structure 29 2.2.2 Accounting standards 30 2.3 Current issues of accounting revenue and costs of construction contract in Ho Chi Minh Museum Construction JSC 31 2.3.1 Current issues of construction contracts of the Company 31 2.3.2 Current issues of accounting for revenue in construction contracts of the Company 34 2.3.3 Current issues of accounting for costs in construction contracts of the Company 38 2.3.4 Current issues of the presentation of information related to the construction contract on the financial statements at the Company 56 2.4 Assess accounting situation for revenues and costs at the Company 57 2.4.1 Advantages 57 2.4.2 Disadvantages 58 CHAPTER COMPLETION OF ACCOUNTING FOR REVENUE AND COSTS IN CONSTRUCTION CONTRACT IN HO CHI MINH MUSEUM CONSTRUCTION JSC 61 3.1 Solutions to complete revenue and cost accounting of construction contracts according to VAS 15 in Ho Chi Minh Museum Construction JSC 61 3.1.1 For construction contract 61 3.1.2 For revenue 62 3.1.3 For costs 65 3.1.4 For presentation on FS 67 3.2 Applying new accounting standards IFRS 15 - Revenue from Contracts with Customers in accounting of construction contract 67 iv 3.3 Conditions for implementing solutions and recommendations 69 3.3.1 From the State and the authorities 70 3.3.2 From Ho Chi Minh Museum Construction JSC 71 CONCLUSION 73 REFERENCE 74 APPENDIX 75 APPENDIX 102 APPENDIX 104 APPENDIX 106 APPENDIX 114 APPENDIX 115 APPENDIX 116 APPENDIX 117 APPENDIX 1178 APPENDIX 10 119 v LIST OF ACRONYMS Dep Department FS Financial statement IFRS International Financial Reporting Standards JSC Joint stock company VAS Vietnam Accounting Standard VAT Value added tax vi LISH OF TABLE AND ILLUSTRATION Table 2.1 – Debt-to-assets ratio of the Company 28 Table 2.2 - Net profit margin of the Company 28 Figure 2.1 - Organizational Structure of Ho Chi Minh Museum Construction JSC 27 Figure 2.2 - Organizational accounting department structure 30 vii INTRODUCTION Rationale The basic construction industry is a key economic sector in which accounts for a great portion of the country's economy Especially for Vietnam, a developing nation, construction works are on the rise in both major cities and small towns, attracting the investment attention of many organizations and businesses The construction industry in Vietnam is also facing a challenging competitive environment due to foreign investment On the other hand, with capital expenditure for construction accounting for a large proportion of the total state budget as well as the budget of the entities, investment in construction is also a very significant and sensitive field Due to the peculiarities of the construction industry, it is even more difficult to account the revenues and costs of construction contracts, which has already been complicated On the other hand, in fact, the accounting of revenues and costs between construction enterprises has not really been consistent, not reflected in a timely and accurate information about revenues and expenses of construction activities, then cause difficulties for the management, inspection and auditing process, at the enterprises, the managing agencies and the related parties Although the Ministry of Finance had issued a relatively complete system of Vietnamese Accounting Standards (VAS), consistent with international accounting standards and practices, including VAS 15 - Construction contracts for construction contract accounting and financial statements (FS) of contractors from January 2003, however, until now most of the construction enterprises have not yet mastered proficiency In the international economic integration era, accounting in entities that follow a common standard as VAS and in long-term is International Financial Reporting Standards (IFRS) is an indispensable need Therefore, the application of VAS 15 – Construction contract into the accounting of revenues and costs of construction activities in construction enterprises is extremely necessary and urgent recently Coming from those reasons, the author select the topic: "Completion of accounting for revenue and costs in construction contract in Ho Chi Minh Museum Construction Joint Stock Company" as a graduate thesis Literature review Discussing the topic of revenue accounting and construction contract costs, there are several writers who have done this work through graduation thesis, master thesis, and so on The author would like to draw some conclusions from the studies as follows, because of restricted conditions: Author Nguyen Dinh Huu (1991) studied about "Socialist business accounting and the renovation of accounting organization in construction enterprises", presented theories on Socialist Business Accounting and applied it to guidelines for revolutionary accounting in construction companies that suit the market-oriented economy The topic's recommendations, however, are very relevant in that sense, but with the current socio-economic growth, evolving accounting policies and regimes, legal structure on accounting reform, the theme's conclusions need to be updated In 2001, author Truong Thi Thuy studied "Completing the accounting of production costs and calculating the cost of products in state-owned enterprises under the construction of bridges and roads" In this thesis, it have systematized the entire accounting theory of production costs and calculated product prices from the perspective of financial accounting such as cost classification, cost aggregators and product cost calculation, method of gathering and accounting for production costs, calculating product prices The author Truong Thi Thuy focused on researching a field of construction of bridges and roads, the author also considered and evaluated scientifically and practically on production costs and cost of construction products Thereby bringing devise professional and organizational solutions to improve the organization of accounting of production costs and calculate product prices in the construction of bridge and road enterprises Doctoral thesis of author Le Thi Dieu Linh (in 2011) studied "Completing accounting work to collect production costs and calculating product prices in civil construction enterprises" The thesis has found: systematize and analyze theoretical issues about the nature of costs and product costs in construction enterprises, consider 108 109 110 111 112 113 APPENDIX 114 APPENDIX 115 APPENDIX 116 APPENDIX 117 APPENDIX 118 APPENDIX 10 119 120 121 122