ACCOUNTING FOR PRODUCTION COST AT HANOI URBAN ARCHITECT CONSULTING JOINT STOCK COMPANY UAC

i ACKNOWLEDGMENT I would like to acknowledge many people for their help and assistance with this internship However, it is difficult for me to thank all of those fabulous people who have assisted all thing for this report There are some very memorable people who cannot go without mention I take this opportunity to express my profound gratitude and deep regards to my guide, Master of Commerce Dang Thi Thuy Hang, for her exemplary guidance, monitoring and constant encouragement throughout the course of this report The blessing, help and guidance given by her time to time shall carry me a long way in the journey of life on which I am about to embark Furthermore, I would like to express my gratitude to the Center for Advanced Educational Program (AEP) and my school, School of Accounting and Auditing , for their patience in helping me complete this internship program My special thank goes to the respected accountant, Ms Tran Ngoc Dung, in UAC The continuous guidance, important advices and great supports that she gave truly help me prepare my report Without her help this report might not have been a comprehensive one Supervisor: M.Com Dang Thi Thuy HangHa Tien Thanh – Class: Advanced Accounting K52 ii TABLE OF CONTENTS Supervisor: M.Com Dang Thi Thuy HangHa Tien Thanh – Class: Advanced Accounting K52 iii Abstract As the growth of Vietnam’s economy, accounting’s development seems to be one of the most essential fields of any companies which want to assure for their progress In the direction of flourish, maximizing the profits is considered issue so that the investors must make profitable decision toward the companies Furthermore, after a period of economic crisis, creditors now think more about the efficient of cost accounting system of all corporations as the most censorious elements in evaluating the company For illustrating this issue, thesis would analysis the main cost accounting systems at Hanoi Urban Architect Consulting Joint Stock Company – UAC and supports some recommendations for this company The thesis included three chapters following this instruction: Because of the limitation of time and knowledge, my report cannot avoid mistake I look forward to receiving comments from the professors of the National Economics University as well as the staffs from UAC firm in order to complete this report successful Supervisor: M.Com Dang Thi Thuy HangHa Tien Thanh – Class: Advanced Accounting K52 iv Abbreviation SI: Social Insurance HI: Health Insurance UI: Unemployment Insurance Supervisor: M.Com Dang Thi Thuy HangHa Tien Thanh – Class: Advanced Accounting K52 v LIST OF FIGURES Supervisor: M.Com Dang Thi Thuy HangHa Tien Thanh – Class: Advanced Accounting K52 vi LIST OF TABLES Supervisor: M.Com Dang Thi Thuy HangHa Tien Thanh – Class: Advanced Accounting K52 Chapter The characters of services, the producing organization and the management of producing costs at Hanoi Urban Architect Consulting Joint Stock Company - UAC 1.1 Characters of services provided by UAC * Introduction about the company: UAC has been privatized from Hanoi Urban Architect Consulting Company according decision no 4133/QĐ-UB of the People's Committee of Hanoi on 15/06/2005 Company name: Công ty cổ phần tư vấn kiến trúc đô thị Hà Nội Trading name: Hanoi Urban Architect Consulting Joint Stock Company Abbreviation: UAC Headquarter: - Address: No 25, Bui Ngoc Duong Street, Bach Mai Ward, Hai Ba Trung District, Ha Noi - Mobile: 84.4.38634.648 - Fax: 84.4.38.8632.882 - Website: http://www.uac.com.vn - Tax code: 0103008692 on 26 May, 2005 by the Department of Planning and Investment of Hanoi (2 modified December 3, 2009) - Authorized capital of VND 9.702 billion, included: invested capital of Urban Infrastructure Development Investment Corporation (UDIC) of VND 4.948 billion, equivalent 51 percent * Main services: The main outputs are services that UAC provides for their investors and customers Thus, for clear view, the list would illustrate the basic consulting services: • Advising investors in Vietnam and other countries Management consulting construction projects: manage and establish organizations of construction Supervisor: M.Com Dang Thi Thuy HangHa Tien Thanh – Class: Advanced Accounting K52 investment • Designing total ground area, structure: for civil engineering, industries, urban infrastructure, industrial zones • Designing of bridge project and land road • Planning and designing total ground area: for architecture design interior and exterior for civil engineering and industries • Designing interior and exterior architectures overall planning the construction site: for the civil engineering, industrial and processing zones, hi-tech parks, agriculture, and forestry • Designing urban planning, rural and industrial zones • Designing electricity systems: for construction, industrial, urban infrastructure, export processing zones and industrial parks • Designing for ground leveling, drainage systems, internal roads for the civil construction, industrial, export processing zones and hi-tech parks • Considersing about topographic, geological, ecological environment and environmental impact assessment for construction projects Socio-economic surveys and traffic surveys • Designsing engineering, design technology, technical design of construction, estimate making the civil construction and industrial, urban and ruralinfrastructure • Examinating of investment projects, the design, the total estimate • Investing in developing urban areas, industrial zones, eco-tourism parks, amusement parks, real estate, rental housing, factory, warehouse, business office services • Researching, applying and implementing of scientific research and surveying designing of the construction • Consulting supervision of construction, installation of equipment in the field of civil and industrial infrastructure • Drawing up projects and consulting design about phone line system, TV and camera • Seting up bidding documentation and analysis and evaluation of bids • Cadastral cartography, terrain to cater for: urban planning development, Developmental areas, land management, administrative boundaries, land use planning; And building surveyor: subsidence, tilt, deformation, linear positioning, and cadastral documentation serves certificate right of Land Use Supervisor: M.Com Dang Thi Thuy HangHa Tien Thanh – Class: Advanced Accounting K52 • Helding project management, inspection and certification of conformity of quality construction • Real estate valuation • Real estate broker • Managing and administrating of real estate trading floors The company’s operating avtivities are orcurred both inside and outside of Vietnam The quality of UAC’s services has recognized by QUACERT, the National Certification Body of Vietnam to support the state management over standardization Supervisor: M.Com Dang Thi Thuy HangHa Tien Thanh – Class: Advanced Accounting K52 10 Figure 1-1 ISO 9001:2008 Certified No HT 1759/1.11.34 on 20/04/2011 by QUACERT The nature of services is quite simple, based on the requirements of the customers As illustrated by the list that shows main outputs of UAC, the company will set up a short period for basic investors with consultant and review Depending on how long the plans and what they are required advices and consultant belong with those projects or not, the company understands the customers’ demand as supports advanced teams for extended period and professional knowledge Supervisor: M.Com Dang Thi Thuy HangHa Tien Thanh – Class: Advanced Accounting K52 62 business activities have the highest efficiency To accomplish this goal, in addition to saving the cost factor, enterprises must organize and coordinate other measures in a scientific way It is the best practice in the effective implementation issues General accounting, cost accounting and production costs of companies are increasingly strengthened and perfected over to meet the increasing requirements of the management of costs and prices into the market economy The company has applied computerized accounting software, thus workload accounting, such as material management, labor and constructions monitoring, is highly reduced Beside, Finance and Accounting Division upgraded itself to match with the requirements for information management in each department and other related subjects Through internships at companies, I see the work of manufacturing cost accounting and costing the company has the following advantages:  In organizational management: The apparatus of company management is quite compact, consistent with the size of the company The company's departments are distributed clearly about their responsibilities to create good conditions for the duty of all assigned tasks In the process of business, the company has had many innovations in management to take the right direction, in accordance with the conditions of market economy The company has launched several solutions to save production costs and lower product prices but still ensure construction progress and quality of works Specifically, based on the cost estimate , the company reserves planning materials, as a basis for monitoring the amount of material supplied to work, take measures to reduce consumption of materials while maintaining quality work The company has set a target price as an important indicator of system,as to reduce costs , lower actual costs , increase profits for the company In addition, the company attaches great importance to quality issues and work completion schedule, hence retain credibility with investors  In accounting organizations: Based on characteristics of HANOI URBAN ARCHITECT CONSULTING JOINT STOCK, original voucher system, a system of books and reports are legitimate organizations, and high economic efficiency to provide timely information useful for managers and those who need information The voucher rotation set relatively tight, avoid to the maximum loss of assets, and the capital of the company as well as society Organization of accounting is in accordance with company’s requirements management mechanism in market economies The apparatus of Finance and Accounting Division is compact and accounting staff is qualified accountants and high operational capacity, hence they are always effective Currently, the company has used centralized accounting model, which is consistent with management models and organizational forms produced by the method of accounting firms When a construction starts, a worker is appointed to collect the accounting documents sent to accounting department That makes the apparatus more compact, but this still meet management requirements Also, thanks to accounting software to record workload daily, amount of works is significantly reduced at the end of each month while still ensuring the completeness and accuracy of accounting data Daily work of the accounting department is focused on data collection, processing documents, data entry and content of economic Supervisor: M.Com Dang Thi Thuy HangHa Tien Thanh – Class: Advanced Accounting K52 63 transactions on original documents or summary of the original documents of the same type into the computer After entering the data into the encrypted documents on account software, the program will automatically convert the data into the relevant ledger  Cost accounting: - On the classification of costs: The costs of each construction as accounting period are classified simple, hence it is convenient for generate the value Thus, it creates favorable conditions for the cost of final services - On the subjects and method of measuring cost of services manufactured: Specifically here, the subject of collecting cost products, is Project Director and the subject of calculating services manufactured is each project of constructions The determination of the correct and scientific of both subjects is particularly important in measuring cost - On the recording cost of services manufactured: This is a very important part of accounting The company has selected object manufacturing cost included project, and each items per constructions for each period, and method of measuring cost of services, which are determined in accordance with the objects of collecting cost products and calculating services manufactured The cost divided into several items facilitates assessment work of unfinished constructions, and cost project accuracy - On directly labor costs: the company has clearly view about account of payables for employees As divide 334 into 3341 and 3342, the detailed account shows the payable for administrators block and producing block After UAC considered carefully to continuously expand producing block, the chief account has decided to open 33421 and 33422 for requirement of posting entry 33421 shows the payable and 33422 shows the advances Those accounts must be under 3342 because both follows each constructions as to be easy way to generate in financial statement at the end of each quarter and year - On the process of measuring cost of services manufactured: The company accountancy organization that brings production cost together included each project and working items on each quarter is perfectly reasonable, in accordance with the conditions of the production company, and on that basis determine the correct price complete mass production 3.1.2 Disadvantages Base the characteristics of UAC and the regulations of Contract for each project and construction, the process of recording as accounting system is easily and not followed exactly the regulations of Ministry of Finance about the account at level 62: 621 Costs of raw materials or materials directly used 622 Costs of direct employees 623 Costs for use of construction machinery Supervisor: M.Com Dang Thi Thuy HangHa Tien Thanh – Class: Advanced Accounting K52 64 6231 Costs of employees 6232 Costs of materials 6233 Costs of production instruments 6234 Cost of amortization of construction machinery 6237 Costs of hired services 6238 Other costs in cash 627 General production costs 6271 Costs of workshops’ employees 6272 Costs of materials 6273 Costs of production instruments 6274 Costs of amortization of fixed assets 6277 Cost of hired services 6278 Other costs in cash About the cost for use of construction machinery, the accountant at UAC would consider carefully between putting it into 6278 and posting into 623 The main reason for this way is to create simple account system for each project of constructions as to summarize at the end of each month and each year The drawback at this way is not best way to support all information of each project to mangers and director With the summary table, the reader just has a clearly view about only 622, and a disputable vision of cost for stationery, photocopy, and writing and printing documents and using of construction machinery on 6278 In this case, this is an acceptable if those costs would be tiny and not affected to pricing of UAC’s services However, the characteristics in this company show that the main materials must be stationery, photocopy, and writing and printing documents( approximately 30%), thus it is undeniable that they should be presented as one independent account or detailed account in the financial statement Another point, should be recommends, is the cost for use of construction machinery As showing on the table of distributed costs under contract 08/038, machinery is 2% based on the value after Tax This rate is not enough to impact on total expenses for constructions But in this case of UAC, all machines that included big car and expensive machines Both administration and manufactured block must be concerned about this section because it not only has mass percentage but also to be an element to reduce expenses 3.2 Recommendations During the internship at the company, I found that the company always tries to apply the appropriate regulations and accounting standards, in accordance with the actual situation at the company However, general accounting and cost accounting system would be particularly positive contribution to the improvement of production efficiency, the business in the future, should further improve the measuring cost of Supervisor: M.Com Dang Thi Thuy HangHa Tien Thanh – Class: Advanced Accounting K52 65 services in the direction of science and rationality As a student intern at the company, on the basis of my knowledge, and apply at the actual situation of the company, I had to learn and study a number of solutions for accounting production costs and pricing I'm boldly offer to exchange some ideas to further improve cost accounting at the company, to help improve management efficiency an business productivity on the development of the Company Depend on the disadvantage above, the solution is to separate both cost of stationery, photocopy, and writing and printing documents and costs for use of construction machinery from 6278 account to make completely view for each construction For this change, the detailed book, account system and general book must be shift to the full list of account level 62, included: 622: Costs of direct employees 623: Costs for use of construction machinery 627: General production costs 6278: Other costs in cash 62781: Cost for stationery, photocopy, and writing and printing documents Following the change in those account, it lead to other change, which must be in accordance with Supervisor: M.Com Dang Thi Thuy HangHa Tien Thanh – Class: Advanced Accounting K52 66 The firs is the table of tracking pay back advances: need to separate the column of cost materials directly used, cost for use of construction machinery and other costs in cash to match the requirement of recording in Finance and Accounting Division For example: The List of Tracking Documents of Paying back Advances December 2013 Department: Center of plan and development Project Director: PHAM BICH VAN Contract: 38/2008 – Designed and released for construction drawings I5 Yen Hoa Supervisor: M.Com Dang Thi Thuy HangHa Tien Thanh – Class: Advanced Accounting K52 67 The second change is the step of recording It would be: Debit: 622 623 98,959,400 6,723,636 6278 21,049.647 (= 5,684,250 + 5,621,487 + 9,743,910) 62781 195,642,000 Credit: 1412 334,224,594 The third is systems of account book About detailed book, the chief account would add detailed book as general book of 621 and 623 The finally is fix detailed book and general book follow the step of recording below: Debit: 154 334,224,594 Credit: 622 98,959,400 623 6,723,636 6278 21,049.647 62781 195,642,000 Supervisor: M.Com Dang Thi Thuy HangHa Tien Thanh – Class: Advanced Accounting K52 68 Conclusion The premium goal of any firm is maximizing profit Directors always searches for the best ways to reduce cost of producing project in conjunction with remaining the same of their quality’s services Thus, the cost accounting system is very important to the operation of all companies including commercial firm like UAC in particular I got insight into professional practice I learned the different facets of working in UAC I experienced that Accounting system, as in many fields, is an important factor for the successful of Financing and Accounting Division as the progress of company Related to my study I learned more about the accounting software, the way to record on computer and practice accounting entries As a staff in months, I hope that UAC will grow faster and stronger to contribute more constructions in Vietnam The internship was also good to find out what my strengths and weaknesses are This helped me to define what skills and knowledge I have to improve in the coming time It would be better that the knowledge level of the language is sufficient to contribute fully to report Furthermore, this internship has given me new insights and motivation to improve myself for my job in the future Finally, I really appreciate and would like to thank to accountants at UAC and the professional guidance of M.Com Dang Thi Thuy Hang whom support me to complete this internship report Supervisor: M.Com Dang Thi Thuy HangHa Tien Thanh – Class: Advanced Accounting K52 69 References Vietnamese Đặng Thị Loan (2012) Giáo trình kế tốn tài doanh nghiệp Ha Noi: National Economics University Press Nguyễn Ngọc Quang (2013) Giáo trình kế toán quản trị National Economics University Press Nguyễn Văn Dung (2010) Từ điển Kế toán, Kiểm toán Anh – Việt Labor Press English William N Lanen, Shannon W Anderson and Michael W Maher, Fundamentals of Cost Accounting, 3rd Edition (McGraw-Hill 2011) Donald E Kieso, Jerry J Weygandt, Terry D, Warfield (2012) Intermediate Accounting, 14th edition USA: John Wiley & Sons, Inc Jerry J Weygandt, Paul D Kimmel, Donald E Kieso (2012) Accounting Principles, 10th edition USA: John Wiley & Sons, Inc Ministry of Finance (2006) Decision No 15/2006/QD-BTC Socialist Republic of Viet Nam Website: - Hanoi Urban Architect Consulting Joint Stock Company -http://uac.com.vn/trang-chu.html COMMENTS Supervisor: M.Com Dang Thi Thuy HangHa Tien Thanh – Class: Advanced Accounting K52 ... producing costs at Hanoi Urban Architect Consulting Joint Stock Company - UAC 1.1 Characters of services provided by UAC * Introduction about the company: UAC has been privatized from Hanoi Urban Architect. .. corporations as the most censorious elements in evaluating the company For illustrating this issue, thesis would analysis the main cost accounting systems at Hanoi Urban Architect Consulting Joint. .. accounting at UAC of production cost 2.1 Accounting for producing costs in the company Characteristics of the production costs of the company: Under the regulations of contracting and looking for work,