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FOREIGN TRADE UNIVERSITY FACULTY OF ACCOUNTING AND AUDITING -*** MID-TERM INTERNSHIP REPORT Major: Accounting - Auditing with ACCA Orientation PAYROLL ACCOUNTING AT LONG HUNG INVESTMENT TRADING AND SERVICE LIMITED COMPANY Student name : Vu Ngoc Ha Student code : 1618820026 Class : English Intake : 55 Supervisor : Nguyen Thi Thu Hang, Assoc.Prof Phd Hanoi, August 2019 STATUTORY DECLARATION I herewith formally declare that I myself have written the submitted Mid-term Intership Report independently I did not use any outside support except for the quoted literature and other sources mentioned at the end of this paper Hanoi, August 2019 Signature ACKNOWLEDGEMENT I would like to give my sincere thanks and appreciation to Assoc.Prof PhD Nguyen Thi Thu Hang, Lecturer at Foreign Trade University for her thorough instruction in the last one-month period Her comments and suggestions, as well as many useful knowledge that she provided, were of paramount importance for me to learn and accomplish my report I am deeply indebted to Accounting Department staffs at Long Hung investment trading and service limited company for their help during my internship I did learn a lot and gain many practical experiences relating to my major thanks to their due care and attention Lastly, I would like to express my gratitude to every other staffs and colleagues for their great support when I worked at the company Hanoi, August 2019 Signature TABLE OF CONTENTS STATUTORY DECLARATION ACKNOWLEDGEMENT LIST OF TABLES PREFACE INTRODUCTION OF LONG HUNG INVESTMENT TRADING AND SERVICE LIMITED COMPANY 1.1 Establishment and development 1.2 Main business activities 1.3 Organizational structure, functions of departments 1.4 Organizational structure of Accounting Department 11 1.5 General assessment of Long Hung company’s business activities 13 PAYROLL ACCOUNTING AT LONG HUNG INVESTMENT TRADING AND SERVICE COMPANY LIMITED 15 2.1 Theoretical approach 15 2.1.1 Definition 15 2.1.2 Contents 15 2.1.3 Requirements 18 2 Payroll accounting of Long Hung company 19 2.2.1 Payroll polices of Long Hung company 19 2.2.2 Current situation of payroll accounting 21 EVALUATION AND RECOMMENDATIONS TO IMPROVE PAYROLL ACCOUNTING AT LONG HUNG INVESTMENT TRADING AND SERVICE LIMITED COMPANY 32 3.1 Evaluation payroll accounting at Long Hung investment trading and service limited company 32 3.1.1 Advantages 32 3.1.2 Short-comings 33 3.2 Recommendations 35 CONCLUSION 37 REFERENCES 38 APPENDIX 39 LIST OF TABLES Table 1.1: Capital contributing members of Long Hung company Table 2.1: Insurance premium of companies and employees 17 Table 2.2: Payroll of Administration and Human resources Department 26 Table 2.3: Payroll of Sales Department 27 Table 2.4: Insurance payables 28 Table 2.5: Account 3342 Payables to employees - Admin & HR Department 29 Table 2.6: Account 3382 Other payables - Union fund 31 Table 2.7: Account 3383 Other payables - Social insurance 31 Table 0.1: Salary grade at Long Hung company 39 Table 0.2: Timesheets of Administration and Human Resources Department 40 Table 0.3: Sales target 41 Table 0.4: Payroll allocation to departments 42 Table 0.5: Account 3384 Other payables - Health insurance 43 Table 0.6: Account 3386 Other payables - Unemployment insurance 44 Figure 1.1: Organizational structure of Long Hung company Figure 1.2: Organizational structure of Accounting Department 11 PREFACE In the modern society, advanced technology creates strongly competitive market for all companies Therefore, every company has to find ways to operate more and more effectively The leaders need to have deep understanding of financial management to use expenses in an efficient way One important aspect of financial management that no leader should neglect is payroll accounting Payroll accounting is not only a processing function but it also plays a vital role in protecting the company’s reputation by ensuring compliance with laws and legislations It is easily seen that human resources is one of the most valuable assets of a company and keeping satisfactory of employees is the only way that helps the organization function normally As a result, payroll, includes compensation package, is a wonderful tool that makes an employee feel his worth within the organization This can boost labor productivity of all company Understanding the importance of payroll accounting, Long Hung investment trading and service limited company always makes an effort to improve this system Being a company in the Food and Beverage Industry – one of the most competitive industries, it is highly important for Long Hung company to manage payroll accounting well If the company can that, human resources will be a great advantage which helps Long Hung to have a stable position in the market During my internship at Long Hung company, I decided to write my report with the topic “Payroll accounting at Long Hung investment trading and service limited company” My report is divided into chapters: Chapter 1: Introduction of Long Hung investment trading and service limited company Chapter 2: Payroll accounting at Long Hung investment trading and service company limited Chapter 3: Evaluation and recommendations to improve payroll accounting at Long Hung investment trading and service limited company INTRODUCTION OF LONG HUNG INVESTMENT TRADING AND SERVICE LIMITED COMPANY 1.1 Establishment and development Full name: LONG HUNG INVESTMENT TRADING AND SERVICE LIMITED COMPANY Abbreviation: LONG HUNG ITS CO., LTD Location: D2-C, Duy Tan Street, Dich Vong Hau, Cau Giay, Hanoi Chartered capital: 21, 680,000,000 VND (Since establishment, there is no change of chatered capital.) Capital contributing members: Table 1.1: Capital contributing members of Long Hung company No Members Value of capital Percentage of capital Tran Van Sen 16,260,000,000 75.000% Tran Thi Ngoc Bich 5,420,000,000 25.000% (Source: Business registration of Long Hung company) Legal representative: Ms Tran Thi Ngoc Bich In 2012, Long Hung company is founded by Mr Tran Van Sen and his daughter, Ms Tran Thi Ngoc Bich Mr Tran Van Sen is the Founder and Chief Executive Officer of Huong Sen group, a group specializing in Manufactoring Beer – Beverage; Packaging; Yarn, textile, dyeing and printing; Exporting garment Although legally being an independent company, Long Hung is founded with the orientation to further develop Huong Sen group’s products of Wine - Beer – Beverage, to brand, to complete the distribution system of products to domestic and foreign markets In the early days of establishment, due to the volatile market, Long Hung company had many difficulties when establishing a foothold in the market But with the wise leadership and determination of the Board of Directors, Long Hung company has gradually overcome difficulties to create markets and boost sales of products At present, Long Hung company’s distribution channels have been developed nationally wide with more than 140,000 distributors, 72,000 wholesalers and retailers Besides, Long Hung company has also made a modern consumer channel The Group’s products are present on most supermarkets in Vietnam with more than 1,000 large and small supermarkets across the country 1.2 Main business activities As a subsidiary of Huong Sen group, the most noticeable business activities of Long Hung company is branding, distributing and selling Huong Sen’s products, which are: Dai Viet Beer: Includes: Super, Lager, Pilsner, Gold 9999, Gold 999, Silver, Black, Red Pushmax Beverage Includes: Passion fruit, Orange fruit, Winter melon tea, Salted lemon, Strawberry fruit, Peach fruit, Apple fruit, Purified water Lac Hong Wine Additionally, Long Hung company has main channels of distribution: Channel of Hotels and restaurants Channel of Supermarkets Channel of wholesalers and retailers - traditional distribution channel 1.3 Organizational structure, functions of departments Board of Directors Admin & HR Deparment Accounting Department Marketing Department Sales Department Figure 1.1: Organizational structure of Long Hung company (Source: Administration and Human Resources Department) Long Hung company is divided into many different departments with different functions Each department has its own characteristics: Board of Directors: Including director and deputy directors The Board of Directors is responsible for quickly grasping information about the business, managing its business issues, managing all the affairs Long Hung Company Limited and being the highest legal responsible person for state law Administration and Human Resources Department: Including manager, deputy manager and employees, under the direct guidance of the Board of directors, has the function of advising the director on the organization of labor, training employees, rewarding and administrative managing This department is also responsible for handling procedures for labor contracts, recruitment, monitor regimes, policies on social insurance, health insurance, unemployment insurance, labor accidents, retirement, leave due to working capacity decline, Administration and Human Resources Department also includes security guards and receptionist Security guards are responsible for protecting the assets of the company Receptionist is responsible for sending and receiving parcel mail, guiding visitors entering the company in accordance with regulations Accounting Department: Including Chief Accountant and accountants Accounting department is responsible for accounting all activities related to finance At the same time, it is also responsible for calculating wages to pay employees; determining taxes payable to the state; managing debts of the company; reflecting and proposing the company's revenue and expenditure plans; preparing monthly, quarterly, yearly financial statements Marketing Department: Including manager and employees, responsible for market research and segmentation, target determination, branding This department also develop new products, implementing marketing strategy plans Sales Department: Sales department is divided into divisions, led by sales manager Sales group for hotels and restaurants: Includes group leader and 15 employees Sales group for supermarkets: Includes group leader and 15 employees Sales group for agents - traditional distribution channel: Includes group leader and 20 employees Sales Department is responsible for achieving revenue target made by Board of directors, allocating targets for each sales group, keeping good relationships with partners and customers, advising the Board of directors to deal with the company's business activities 10 The system of books and ducuments is organized legally and in compliance with the current accounting regime of the Minister of Finance The making of financial reports is also performed in a scientific and simple way by the accountants Periodically, the accountant synthesizes the reports of the enterprise and prepares a report for Board of Directors In addition to the reports prepared in accordance with the prescribed form by the Ministry of Finance, Accounting Department also sets up reports for internal management These reports are not only on the computers but also printed for storage About the accounting of salaries and deduction under salaries Long Hung uses two methods of payroll accouting: according to time and according to sales This is advantageous because it makes employees feel secured and creates motivation for Sales staffs to boost revenue at the same time Kinds of allowances represents the care to employees’life Attendance allowance motivates employees to fully work at office In addition, giving lunch allowance and housing allowance is a way of supporting employees As a result, they are likely to devote more to the company Payroll accounting of Long Hung company is performed in a simple, easy and accurate way All employees receive salaries through bank accounts This payment method of salaries is suitable with modern society and ruduces the risks of errors, loss and defalcation Long Hung company always exactly applies the polices of social insurance, health insurance, unemployment insurance and union fund stipulated by the state This ensures the benefits for all employees and make them be loyal to the company 3.1.2 Short-comings About the system of books and documents Long Hung is a trading company which operates in the Food and Beverage industry This means that the company directly works with many partners, for example 33 hotels, restaurants and agencies in different provinces The process of selling products arises the risk of losing documents Moreover, the time to gather documents is long and does not ensure timeliness For employees who are on a long-term business trip, it is difficult to synthesize salaries-related documents due to the busy work Therefore, the accounting of payroll for these employees has not been timely implemented, leading to inaccurate allocation of salaries into monthly cost There is no detailed journal set up to for each sales group Sales Department has the highest number of employees so accounting for this department is likely to have errors Besides, when synthesising at the end of the month, sales groups have to wait for each other This impacts on the timeliness of paying salaries to employees About the accounting of salaries and deduction under salaries Long Hung company perform all stipulated kinds of insurance and fund but there are still some problems Long Hung company does not make deductions for vacations, such as Tet holidays This makes the cost incurred in that period of the company soar, leading to the fluctuations of the company's business results The company does not have a reward regime for employees Reward is one of the measures that can motivate employees, encourage employees to promote their creativity and dynamism to fulfill their tasks well Therefore, it is not likely that the company improve labor productivity Almost all employess in a department, except for managers of departments and group leaders, have the same amount of salaries This regime is not really reasonable because in the same department, employees have different experience, capability, workload and the total working time at the company The same amount of salaries discourages employees from increasing labor productivity and being loyal to the company Long Hung company has extracted Union fund but the use of this fund is not effective The organization of cultural events and care for the life of employees in the 34 company has not been really focused Many employees not fully understand the tradition and culture in the company, so they intend to change to better working environment It is necessary to have cultural activities, sports or cultural exchange to help employees to have good relationship, solidarity and unity 3.2 Recommendations Long Hung company should apply advanced technology to improve all processes of accounting For example, the company should refer to electric bills Electric bills solves the problem of distant partners because accouting Department can record data to books almost immediately This will increases the speed of handling and proceeding in all accounting processes Moreover, Long Hung company may consider creating an online system for all employees In this system, each employee has an individual account One account follows the work of one employee, represents which has been completed or not The account also shows payroll status of bank account so both employees and the company can check if there is a error The employees can upload salaries-related documents, such as Sales reports through the system and send them to other employees or other department In term of advanced technology, Long Hung company should choose reputable suppliers to reduce the risks of information being lost and stolen Besides, there should be employees who are in charge of managing and handling technical problems Long Hung company should create detailed journals for each Sales group With this recommendation, Accounting Department can control data and documents easily If there is an error, detailed journals will help accountants to trace back to find and fix the error Specifically, the company can refer to these accounts: Account 64111 - Sales group for hotels and restaurants Account 64112 - Sales group for supermarkets Account 64113 - Sales group for agents 35 In order to ensure that the company's operating results not fluctuate strongly when paying for vacations or holidays of employees, the company need to plan and extract an amount from the salary fund When real payment occurs, Accounting Department make adjustments to accounts Specifically: Based on the holidays, vacation plans, leave to make advance deductions: Debit Account 622, 641, 642 / Credit Account 335 When actual costs arise, record entries Debit Account 335 / Credit Account 334, 111, 112 Adjust the planned number to the number in reality Debit Account 622, 641, 642 / Credit account 335 (If the arising number is greater than the planned one) Debit Account 335 / Credit Account 622, 641, 642 (If the arising number is smaller than the planned one) Long Hung company should creat reward fund and give employees bonuses Bonuses are for employees who have outstanding work results This fund will help employees to have motivation and increase labor productivity Specifically: Debit Account 431 Credit Account 334 In addition to the reward regime is penalty regime This is for employees who violate the allowable norms For example, penalty for going to the office late with acceptable reasons In all penalties, it must be clearly defined with specific norms and contents The company should have a strict and fair remuneration regime to manage labor more effectively and improve the quality of responsibility of employees at work 36 CONCLUSION A well-managed payroll accounting is an important factor which contributes to improve labor productivity by ensuring accurate calculations of salaries, deductions and increasing income for employees Additionally, it also promotes the compliance with the State’s policies In order to enhance payroll accounting, Board of Directors and Accounting Department need to thoroughly understand the accounting model and the current situation of the company to provide the best management method Accountants must always update the newly promulgated regime of the State and the Finance Ministry; develop regulations on the transfer of documents, on the accounting coherence, on the financial system to contribute to the success of the company Then, they can find appropriate measures to save costs, lower product costs, increase profits from business activities Long Hung investment trading and service limited, the company that I choose to intern company - relentlessly make the effort in improve the quality of accounting system, especially payroll accounting In the intershipship period, I have gain useful and practical knowledge It is very meaningful for me in the career path in the future However, this is the first time I am exposed to real-world and accounting-related job Besides, my practical knowledge is still limited Therefore, my report inevitably has many shortcomings I hope to receive the evaluation and suggestions of the supervisor, so that my report is more complete and close to reality Finally, I sincerely thank Assoc Prof PhD Nguyen Thi Thu Hang her enthusiastic and considerate guidance In addition to that, I want to show my gratitude to all staffs of Accounting department at Long Hung investment trading and service limited company for their support during the internship and completion of this mid-term internship report 37 REFERENCES Dang Thi Loan, 2012, Financial accouting in enterprises, Publisher of National Economy University Ngo The Chi and Truong Thi Thuy, 2013, Finance accouting, Finance Publisher Vietnamese Accouting Standard, 2013, Finance Publisher Circular no 200/2014/TT-BTC published on 22/12/2014 of Finance Ministry: Guidance on accouting system in enterprises Internal documents of Long Hung company Website https://tuoitre.vn/nganh-thuc-pham-chia-nhau-mieng-banh-dau-tu20181213110702631.htm 38 APPENDIX Table 0.1: Salary grade at Long Hung company Unit: VND NO POSITION SALARY GRADE NUMBER Board of Directors Director 80,000,000 Deputy director 60,000,000 Admin & HR Department Manager of Admin & HR Department 20,000,000 Deputy manager of Admin & HR Department 12,000,000 Admin & HR staff 10,000,000 Receptionist 7,000,000 Security guard 5,000,000 Accounting Department Manager of Accounting Department 20,000,000 Accounting staff 10,000,000 Marketing Department 10 Manager of Marketing Department 20,000,000 11 Marketing staff 12,000,000 Sales Department 12 Manager of Sales Department 40,000,000 13 Sales group leader 15,000,000 14 Sales staff 5,000,000 50 (Source: Admin & HR Department at Long Hung company) 39 Table 0.2: Timesheets of Administration and Human Resources Department Long Hung Investment Trading And Service Limited Company N O March, 2019 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 LEAVE TOTAL WORKING DAYS + + + + + + + + + + + + + + + + + / / + 0 25 NAME Nguyen Thi Ha + + + + + + Nguyen Van Khanh + + + + + + + + + + + + + + + + + + + + + + + + + + 0 26 Le Quang Nam + + + + + + + + + + + + + + + + + + + + + + + + + + 0 26 Tran Thi Linh + + + + + + + + + + + + + + + + + + + + + + + + + + 0 26 Le Thu Tra + + + + + + + + + + + + + + / / P P P + P + + + + + 21 Tran Van Đat + + + + + + + + + + + + + + + + + + + + + + + + + + 0 26 Le Van Khang + + + + + + + + + + + + + + + + + + + + + + + + + + 0 26 Prepared by Chief accountant Chief executive officer (signed) (signed and sealed) (signed and sealed) Vu Huyen Trang Vu Thuy Hang Tran Thi Ngoc Bich (Source: Accounting Department at Long Hung company) 40 Table 0.3: Sales target Long Hung Investment Trading And Service Limited Company Unit: VND Sales target group B1 March, 2019 No Group Name 10 B1 B1 B1 B1 B1 B1 B1 B1 B1 B1 Le Thi An Dang Mai Chi Nguyen Xuan Tung Vu Thi Hoa Nguyen Van Nhat Nguyen Thi Mai Nguyen Van Hong Nguyen Minh Quan Tran Nhat Minh Le Thanh Minh Silver 200 200 320 320 320 0 250 250 250 CANNED BEER Price Larger 250,000 100 250,000 100 250,000 250,000 250,000 250,000 370 250,000 370 250,000 100 250,000 100 250,000 100 Price 220,000 220,000 220,000 220,000 220,000 220,000 220,000 220,000 220,000 220,000 Total 72,000,000 72,000,000 80,000,000 80,000,000 80,000,000 81,400,000 81,400,000 84,500,000 84,500,000 84,500,000 Hanoi, February 25th, 2019 Prepared by (Signed) Le Van Minh Checked by (Signed) Admin Ha Thi Nga (Source: Accounting Department at Long Hung company) 41 Approved by (Signed) Sales manager Do Thi Lan Table 0.4: Payroll allocation to departments Long Hung Investment Trading And Service Limited Company Unit: VND March, 2019 Allowance No No of worki ng days Department Insurance Basic salary Lunch Attendance Housing Total salaries and allowance Real salaries and allowance Targ et/Sal es Pieces wage Social insurance Health insurance Unemploy ment insurance 8% 1,5% 1% Total Net salary ADMINISTRATIVE DEPARTMENTS Board of Director 78 0 200,000,000 3,000,000 900,000 3,000,000 206,900,000 206,900,000 0.00 % 16,000,000 3,000,000 2,000,000 21,000,000 185,900,000 Admin & HR Department 176 69,000,000 7,000,000 1,500,000 1,000,000 78,500,000 77,637,363 0.00 % 5,520,000 1,035,000 690,000 7,245,000 70,392,363 Accounting Department 156 0 70,000,000 6,000,000 1,800,000 1,000,000 78,800,000 78,800,000 0.00 % 5,600,000 1,050,000 700,000 7,350,000 71,450,000 MARKETING AND SALES DEPARTMENT Marketing Department 104 0 56,000,000 4,000,000 1,200,000 1,000,000 62,200,000 62,200,000 0.00 % 4,480,000 840,000 560,000 5,880,000 56,320,000 Sales Department 1,287 335,000,000 54,000,000 15,000,000 4,000,000 408,000,000 376,324,786 74.67 % 161,287,200 26,800,000 5,025,000 3,350,000 35,175,000 502,436,986 1,801 12 730,000,000 74,000,000 20,400,000 10,000,000 834,400,000 801,862,149 74.67 % 161,287,200 58,400,000 10,950,000 7,300,000 76,650,000 886,499,349 Total Prepared by Chief accountant Chief executive officer (signed) (signed and sealed) (signed and sealed) Vu Huyen Trang Vu Thuy Hang Tran Thi Ngoc Bich (Source: Accounting Department at Long Hung company) 42 Table 0.5: Account 3384 Other payables - Health insurance Unit: VND Documents Date of recording Number Explanation No Account Date Debit Opening balance Crebit 05/04 YT 05/04 For Departments Administrative 642 10,170,000 05/04 YT 05/04 For Marketing Department and 641 Sales Department 11,730,000 05/04 YT 05/04 Deduction for employees 334 10,950,000 05/04 TT 05/04 Payment for authority 111 Total 32,850,000 32,850,000 Closing balance 32,850,000 (Source: Accouting Department at Long Hung company) 43 Table 0.6: Account 3386 Other payables - Unemployment insurance Unit: VND Documents Date of recording Number Explanation No Account Date Debit Opening balance Crebit 05/04 TN 05/04 For Departments Administrative 642 3,390,000 05/04 TN 05/04 For Marketing Department and 641 Sales Department 3,910,000 05/04 TN 05/04 Deduction for employees 334 7,300,000 05/04 TT 05/04 Payment for authority 111 Total 14,600,000 14,600,000 Closing balance 14,600,000 (Source: Accouting Department at Long Hung company) 44 45 46 47
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