Accounting for salary and salary deduction at hoa binh investment and development corporation

Process of accounting for salary at HBI company...44 3.4 ACCOUNTING SALARY DEDUCTIONS: SOCIAL INSURANCE, HEALTH INSURANCE, LABOR UNION FEE AND UNEMPLOYMENT INSURANCE....51 CHAPTER 4: DIS

CENTRE FOR ADVANCED EDUCATIONAL PROGRAMS

AND DEVELOPMENT CORPORATION

Student’s Name: Ta Yen Trang

Class: Advanced Accounting A

Student ID: 11124231

Internship guide: Ms Nguyen Thi Huong

Instructor: Assoc Prof Dr Pham Thi Bich Chi

Hanoi, 2016

LIST OF TABLES

LIST OF DIAGRAM

EXECUTIVE SUMMARY

CHAPTER 1: INTRODUCTION 1

1.1RATIONAL 1

1.2 RESEARCH OBJECTIVES 2

1.2.1 General objectives 2

1.2.2 Specific objectives 2

1.3 METHODOLOGY 2

1.4 RESEARCH SCOPE 3

1.4 STRUCTURE OF THESIS 3

CHAPTER 2: THEORETICAL FRAMEWORK OF PAYROLL ACCOUNTING 4

2.1 THE CONCEPT OF SALARIES AND SALARY DEDUCTIONS 4

2.1.1 The concept of salaries 4

2.1.2 The concept of the salary deductions 4

2.1.3 Economic Content of accounting salaries and salary deductions 5

2.1.4 Factors affecting salary 7

2.1.5 The basic principle in wages 7

2.2 FUNTIONS OF SALARIES AND SALARY FORMS 7

2.2.1 The function of salaries 7

2.2.2 Salary and workforms 8

2.3 SALARY DEDUCTIONS 15

2.3.1 Salary funds 15

2.3.2 Salary Deductions 16

2.4 ACCOUNTING SALARY 19

2.4.1 Functions of Payroll Accountant 19

2.4.2 Accounting for labor and labor time 19

2.4.3 Documents used 23

2.4.4 Account used 23

2.4.5 Generall acounting for salary 24

2.5 ACCOUNTING FOR SALARY DEDUCTIONS 26

2.5.1 Documents used 26

2.5.2 Account used 27

2.5.3 General Accounting for salary deduction 28

3.1 OVERVIEW ABOUT HBI COMPANY 30

3.1.1 Establishment and development of the company 30

3.1.2 Product features 32

3.1.3 Characteristics of the Business Operation of HBI Company 32

3.1.4 Organizational structure of the company 34

3.1.5: Structure of labor force at HBI Company 36

3.2 STRUCTURE OFF ACCOUNTING SYSTEM ATT HBI COMPANY 38

3.2.1 Organization structure of accounting department at HBI Company 38

3.2.2 General knowledgement about accounting information system of the company 41

3.3 ACCOUNTING FOR SALARY AT HBI COMPANY 43

3.3.1 Form of salary at HBI Company 43

3.3.2 Process of accounting for salary at HBI company 44

3.4 ACCOUNTING SALARY DEDUCTIONS: SOCIAL INSURANCE, HEALTH INSURANCE, LABOR UNION FEE AND UNEMPLOYMENT INSURANCE 51

CHAPTER 4: DISCUSSION AND SOLUTION TO IMPROVE PAYROLL ACCOUNTING AT HBI COMPANY 69

4.1 Assessment of the status of the Payroll Accounting and salary deductions at the HBI Company 69

4.1.1 Advantages 70

4.1.2 Disadvantages 72

4.2 SOME SOLUTION TO IMPROVE PAYROLL ACCOUNTING AT HBI COMPANY 72

4.2.1 The neccesary to improve the accounting salary and salary deductions 72

4.2.2 Some solution in order to improve the accounting salaries and salary deductions 74

CHAPTER 5: CONCLUSION 78

REFERENCE 79

APPENDIX 80

Thanks to the support and assistance of many people, the internship and thethesis was completed successfully.

Firstly, I would like to express my gratitude to the Advanced EducationProgram (AEP), for their logical schedule and their responsible supervision whichhelpedme complete this internship program

Next, I give the special thanks to my great supervisor,Assoc Prof Dr Pham ThiBich Chi Having received the continuous guidance, important advices and greatsupports, the report was completed with the result beyond my expectation

I also want to take the opportunity to express a gratitude to HBI Company,especially to my direct instructor, Ms Nguyen Thi Thu Huong, for the support,valuable information and guidance which help me finish this task Without them, Imight not be able to finalize the report

Last but not least, I really appreciate my teammates for the great coordinationand teamwork

I herewith formally declare that I myself have written the submittedBarchelor’s Thesis independently I did not use any outside support except for thequoted literature and other sources mentioned at the end of this paper.

Hanoi, / / 2016Signature

Acc : Account

CA : Chief Accountant CEO : Chief Executive Officer

HI : Health Insurance

S : Social Insurance

UI : Unemployment Insurance

Table 2.1: Salary deduction Amount

Table 3.1: Business Performance of HBI Company from

Table 3.2: Scope of business of HBI Company

Table 3.3: Labor Structure of HBI Company

Table 3.4: Timesheet

Table 3.5: Payment Table

Table 3.6: Kinds of Bonus

Table 3.7:Payment Bonus Table

Table 3.8: Table of Allocation of Salary

Table 3.9 : Allocated table of payment salary and salary deduction

Diagram2.1 Accounting 334 and corresponding accounts

Diagram2.2 Accounting 338 and corresponding accounts

Diagram 3.1: Business Process of HBI Company

Diagram 3.2: Organization Structure of HBI Company

Diagram 3.3: The management off Accounting Department

Diagram (appendix) : Accounting cycle in HBI Company

Diagram (appendix) : Recording process in accounting software

Production of material goods is the basis of the existence and development ofhuman society To conduct the production, there must be three elements: Labor,Land, and Capital Without one of those elements, the production process will nottake place Furthermore, the human labor plays an important role in themanufacturing process, material factors of production is important, but without thelabor associated with human, the means of production does not promote work,salary is just full of human motivation in business production and a cost is made up

in the cost of products, working tools, services, salary is a critical lever to improvethe efficiency of production and business labor productivity growth, which acts toencourage employees in every business to actively participate in the labor andincome for themselves and family When conducting production activities, thequestion for business managers is how much salary should be spent For theemployer, the question is how to increasethe efficiency during the productionprocess, hence laying out the production plan for the next period This is why thewage accounting is very important for enterprises

The analysis about the assessment of the salary fund implementation plan whichaim to provide the managers an overview of thesalary implementation for the entireenterprise Moreover, ithelps them see the advantages and disadvantages inmanaging business activities, as well as to researchthe policy regimes wage norms.The bonuses act as a reward for the employee’s contributions and also to keep theworkers Having obtained the meaning and importance of salary and salarydeductions in business, along with the desire to apply theacademic knowledge in

real-life cases, i have chosen to practice the theme: "Accounting of salary and salary deductions at Hoa Binh Investment and Development Corporation".

However, due to a limited time, I just focused on the salary and salary deductions in

2013, 2014 and 2015 topoint out matters that are most common regarding theaccounting of salary and propose solutions to resolve outstanding issues on salary atHoa Binh Investment and Development Corporation

Contents of my thesis consist of 5 parts:

- Chapter 1: Introduction

- Chapter 2: Theoretical framework of payroll accounting

- Chapter 3: Current situation for payroll accounting at HBI Company

- Chapter 5: Conclusion

CHAPTER 1 INTRODUCTION

1.1 RATIONAL

The salary is the income of the employee on the basis of the quantity and quality oflabor in performing the work of the workers themselves as committed betweenemployers and employees For now, the wages are a cost of production The salariesaccounted for enterprises to implement correctly and properly Salaries are paid ontime for the fruits of labor will stimulate employees to work, increase efficiency forbusinesses, promote the spirit engrossed in work and creativity in labor process Inaddition to the wage that workers are entitled to the bonuses, allowances, socialinsurance, unemployment insurance, labor union fee is the social fund that workersare entitled to, it shows the interest of the society, the business to each member now

Salaries have effective role as economic leverage direct impact on workers Forenterprise, labor costs account for a relatively large proportion of total productioncosts of enterprises So enterprises need to strengthen the management of labor,salary and salary deductions accounting need accurate and timely manner to ensureworkers' rights and facilitate increased productivity labor, labor cost savings, boostproduction and lower product costs

For workers, salary have a sense of utmost importance because it is the main source

of income for their help to ensure the lives of themselves and their families.Therefore salaries can be motivated employees increase productivity if they are paid

in accordance with their labor contribution, but also can reduce labor productivitymakes the production process slowed , does not work efficiently if wages are paidless than the labor of workers spent In the entire range of the economy, wages aremore specifically the process of distribution of material wealth by the workersmake Therefore, the construction of months salary, choosing the appropriate form

of payment so that wages are moderate income workers to ensure the needs bothphysically and mentally, and make wages become motivated workers work better,have more responsibilities with work is really needed jobs Salary policy be applied

flexibly in every way enterprises dependent characteristics managementorganization, production and business organization and depends on the nature ortype of business of each company Recognizing the importance of the issue , Ihavechose the practice theme "Accounting of salary and salary deductions at Hoa BinhInvestment and Development Corporation"

1.2 RESEARCH OBJECTIVES

1.2.1 General objectives

Research the accounting situation of salaries and salary deductions in "HoaBinh Investment and Development Corporation" in order to gain betterunderstanding the theoretical and practical perspective on accounting salary andsalary deductions

1.2.2 Specific objectives

Learn the theoretical concept of salary and salary deductions

Reflects actual accounting of salaries and salary deductions in business

Offer general comments and suggestion to complete and improve the work ofaccounting salary and salary deductions at the company

1.3 METHODOLOGY

- Research methods are mainly the data collected from the administrative office andfinance accounting department of the company to find information about salary andsalary deductions at HBI Company in 3 years : 2013, 2014 and 2015

* Methods of data collection:

- The data on this topic were collected from the room and administrativeorganizations Finance and accounting department of the company

+ The Timesheet, Payment tableand allowances of employees of companies in threeyears 2013, 2014 and 2015

+ Table ofPayroll and social insurance, unemployment insurance, labor union fee+ Plan the salary fund

+ Table operation situation, balance sheet accounting

+ Ledger and subsidiary ledger accounts 334, 338

In addition, I also consulted the comment of some acountant in the accountingdepartment of HBI company; reference books and materials related to the researchtopic

* Methods of analysis of the data:

- Processing, analysis of the information sought by the method of synthesis andcomparison method

+ Absolute comparison method: is the difference of two indicators: indicators andmechanical analysis

Example: Comparison between performance results and the implementation of anyplan or between this and the previous implementation

+ Relative comparison method: As a percentage of 2 indicators: Indicator analysisperiod compared to the original target for completing the degree in proportion to thenumber of absolute differences compared to the original target speak growth

+ Inductive deductive method

- The selected researching time was 2013, 2014 and 2015

- The results of the study help ascertain payroll accounting of the company whether

in line with the business situation of enterprises and in conformity with theprovisions of the state or not

- Helping companies makeforms of payroll suitable with the actual conditions inorder to enhance productivity and labor efficiency

- Also helps understand the different between fact and theory learned.in university

of accounting of salaries and salary deduction

1.4 STRUCTURE OF THESIS

- Chapter 1: Introduction

- Chapter 2: Theoretical framework of payroll accounting

- Chapter 3: Current situation for payroll accounting at HBI Company

- Chapter 4: Solutions to improve payroll acounting at Hoa Binh Investment andDevelopment Corporation (Discussion and Recommendation)

- Chapter 5: Conclusion

CHAPTER 2 THEORETICAL FRAMEWORK OF PAYROLL

ACCOUNTING

2.1 THE CONCEPT OF SALARIES AND SALARY DEDUCTIONS

2.1.1 The concept of salaries

In the market economy, labor is seen as a special commodity, it can create valuefrom the process of labor and production Consequently, salary is the price paid forthelabor;the money that the employers agreed to pay for workers according tomarket mechanisms as influenced by the development law such as labor law, laborcontracts

There are many different definitions of salary, but the most generally and widelyrecognized is:

Salary is the price of labor that formed under an agreement between the employeeand the employer in accordance with the relationship and the rules of the marketeconomy

In other words, the salary is the amount that the employee received from theemployer which is equivalent to the quantity and quality of labor they had expended

to create material goods or other helpful values

2.1.2 The concept of the salary deductions

Along with the payment of salary, the employer must also deduct a certain amount

of the salary calculated in percentage (%)to the fund formed under the regulations toensure the interests of the labor That is the salary deductions, which shall becomplied with the salary regime in our country, including:

- Social Insurance Fund (SI): state regulate that business must be set up this fund bydeduct 26% the minimum salary and salary coefficients of the employees, of which18% deduct from the cost of business units and 8% workers have to pay from theirincome Social insurance fund use to: replace salary during workers absent because

of sickness, maternity, occupational accidents make worker cannot work atenterprises, pension expenses for retired workers on pension funds survivorship,allowances for employees of sickness, and occupational diseases

- The health insurance fund is used to pay medical, hospital fees, medicine toemployees during sickness, childbirth The rate of deduction of 4.5% of the totalbasic salary, of which 3% at the expense of business, 1.5% deduction from thewages of workers

- Funding for the union: to spend on union activities The rate of deduction is 2% ofthe total real salary, calculated on the cost of the entire business.

-Unemployment Insurance Fund: Unemployment insurance is deducted toallowance for workers who lost their jobs According to Article 81 of the SocialInsurance Law, the unemployed are entitled to unemployment insurance when itsatisfies the following conditions: Has paid Social Insurance 12 months and in24months before become unemployment Stillcannot find a job after 15 days from daythat register with Social Insurance Organizations According to the Article 82 ofthe Social Insurance Law, the monthly unemployment allowance equal to 60% ofthe average salary, remuneration on Unemployment Insurance contribution of 6consecutive months before unemployment Source of Unemployment Insurancefund formed as follows: - Employees pay 1% of salary or remuneration on UIcontribution - The employer shall pay 1% of the fund salaries or remuneration on

UI contribution of the workers participate in paid UI Every month, the State budgetsupports equal to 1% of salary fund, remuneration on UI contribution of theparticipants UI and moved once a year So set aside for unemployment insurancerate is 2% of the enterprises in which employees paid 1% and 1% now be included

in the costs of production and business in the period

Business has to deduct and paid theabove funds every quarter A portion ofexpenditures for the social insurance fund is now being authorized for the enterprise

by management agency Based on the reasonable original documents, payment has

to be settledevery quarter to the management agency These above expensesare usedonly to help workers case of sickness or occupational accident

2.1.3 Economic Content of accounting salaries and salary deductions

Salary is the main income source of workers, businesses use salary as an economicleverage to encourage positive mental labor, which is the driving factor forincreasing the labor’s productivity

For enterprises, paying salary to employees is one of the factors that constitute thevalue of products and services created by the enterprise or in other words it is afactor of production to calculate costs of product Therefore, businesses must useeffective labor to save labor costs in the unit price of product, service work and themovement of goods

Salary management activity is an important content in the management ofproduction and business Well organized accounting of salary and labor will helpthe labor management of businesses become respectable, promote worker well

observe labor discipline, labor productivity growth, and it is the basic of payrollcalculating follow accordingly to the principle of labor division.

Buildinggood account salary off labor working part will help businesses manage thesalary fund, ensure the payment of salaries and social insurance allowancescorrectly according to the regime, encourage workers to complete the task assigned,and create a basis for the allocation of labor costs into the prices of products

Payroll Accounting duties include the following four basic tasks:

- Organize notes, reflect and synthesize data on the number of employees, results oflabor time, payroll and salary deduction amounts and allocation of labor costs inaccordance with the employer objects

- Guide, check the accounting staff in production and business departments, thedepartments to fully implement the initial recording as long as the labor and salaryregime, the correct method

- Monitoring the payment of salaries, allowances, bonuses, allowances foremployees

- Prepare reports on labor, salary, salary deductions, conducting periodic analyzesthe labor situation, the status of management and spending of the salary fund,providing information about salary for the management department timely

It can be said that labor costs or salary and salary deductions are not only just thematter of business care, but also of theworkers because this is their rights

Therefore the correct and in time calculation of salary for employees is essentialsince it stimulates the employees’ dedication to work and improve the quality oflabor On the other hand the correct calculation of labor salary also contributes tothe accuracyof costs and product prices calculating

Hence, this activity must be based on the management and monitoring theprocess of mobilizing and using labor for production and business activities ofenterprises The mobilization of the employer is considered to be reasonable wheneach different type of labor required management measures and different uses Sothe classification of workers is essential for all businesses, depending on thedifferent types of businesses that have employees from different classifications

In summary, well organized formulation and accounting salaries salary deductionshelp businesses manage the salary fund to ensure the payment of salary and socialinsurance according to the principle, stimulate workers to complete the assignedtasks and create a basis for the allocation of labor costs into the prices of productsexactly

2.1.4 Factors affecting salary

Salary is not merely economic issues, issues of interest but also the social problemsare directly related to the macroeconomic policy of the State Consequently, wagesare affected by many factors:

- Group elements of business: corporate policy, financial capability, organizationalstructure, culture and atmosphere of the business

- Group of elements belonging to the labor market: supply and demand relationship

in the market, the expense of wages, cost of living, the national income, theeconomic situation - the law

- Group of elements belonging to the workers: quantity - quality of labor, seniority,work experience and other relationships

- Group of the job factors: the amount of labor consumption during the work, laborintensity, labor productivity

2.1.5 The basic principle in wages

- Salary is formed on the basis of an agreement between the employee and theemployer

- Salaries in the labor contract must be greater than the minimum wage prescribed

+ Whatever job and position you work, whether at any age, regardless of gender,ethnicity, religion, if you complete assigned work, it will be granted salarycommensurate with the job This is the condition to ensure the distributionaccording to labor, ensuring social justice

+ Ensure growth rate of labor productivity must rise faster than the speed of theaverage salary This is an important principle in the conduct of business andproduction, by increasing labor productivity is the basis for salary increases,increased profit is thoroughly implement the above principles

2.2 FUNTIONS OF SALARIES AND SALARY FORMS

2.2.1 The function of salaries

 The function lever for production and business of enterprises

The salary is attached to the interests of workers so it becomes the capacity tostimulate creativity, sense of labor, and boost labor productivity Therefore,

thesalary, on one hand is attached to the practical benefits of the workers and on theother hand it confirms the position of the employee in the enterprise Thus,whenreceive a satisfactory, fair andreasonable amount of salary, they will be motivatedwhich will result in the efficient production process and labor productivity, theproduct quality will also be improved accordingly Moreover, the revenue andprofits of enterprises will continue to increase.

 Functions stimulate workers

Implementing reasonable relationship of paymentis not only good for businessbut also brings benefits to employees, encouraging them to increase laborproductivity

When the profit of enterprises increases, the benefits of corporate resources willgrow, which will add additional sources of labor income, create employmentdynamics, enhance cohesion between the employees and the business

 Function reproduce labor power

Salary is the main income of the employee; the source of food for themselves andtheir families Salary income increases will ensure the material and culture life ofworkers and thus increase renewable energyfor social workers

Proper implementation of salary regime for workers will help enterprises have astable labor supply especially for labor professions that traditional nature forspecialized areas such as long-term mining or plantation rubber, coal

2.2.2 Salary and workforms

2.2.2.1 Wage regime

The application of appropriate salary regime embodied in the principle ofdistribution according to labor aim to incorporating the general welfare of thesociety to the benefit of businesses and workers

 Classification according the form of salaries:

- Paid by time: is the form of payment of wages to employees based on the workingtime by rank, position, area allowance, allowances for area that have to pay moremoney (if any) under the provisions of the salary scale by the State

- Payment by time is often applied to the management department does not directlymanufacture products or provide services Due to certain limitations of this form ofpay over time (the average nature, are not really tied to the results of production), so

to remedy that somewhat limited, paid over time can combine processing bonuses toencourage employees to work enthusiastically

- Paid by product: A form of payment according to the quantity and quality of theproducts they were making Form of payment under existing products are made in

various ways depending on the characteristics and conditions of businessproduction.

- Paid based on bonus products: apply to workers directly or indirectly for thepurpose of encouraging workers to increase productivity of labor, raw materialsavings Completion bonus plans and product quality

- Paid by progressive product: As wages paid under the direct products combinedwith progressive bonus interest on the extent of completion of the norm for thecalculation for each person or group of workers Also paid in the form of the finalproduct exchange

- Paid under the Workload Stock: contracting wages are applicable to the workload

or the work should be completed in a certain time When done this way ofcalculating wages, should pay attention to check the progress and quality of workcompletion and acceptance especially for the basic construction work because of thehidden part of the collection of works volume completed it will be difficult todetect

 Classified according to quality:

According to this classification form, salaries are divided into two categories: basicsalary and extra pay

- The basic salary is the salary paid to the employee during time working directlyincluding grade wages, bonuses and allowances

- Extra pay paid to workers in time that workerd don't work but still be paid such asvacation, meetings, studies, festivals,

 Classified according to funtion of salary

According to this classification, salaries are classified into: direct salary and indirectsalary

- Direct Salary is the salary paid to employees directly engaged in production orservice provision

- Indirect salary is the salary paid to employees participate indirectly in the process

of production and business of enterprises

 Classified according to the object

By this way of classification, salaries are divided into: Manufacturing salary, salessalary and management salary

- Manufacturing salary is the salary paid to the subjects performing the function sx

- Sales salary is the salary paid to the subjects perform sales functions

- Management salary is the salary paid to the subjects perform managementfunctions

This method is applied primarily for those working in administration office (officestaff, management staff ) or production workers only applies in the mechanicalparts, or the work can not proceed rigorously, it will not guarantee the quality ofproducts

To pay salary by time, based on three factors:

- The actual working day of the employees

- Unit wage paid per workday

- Salary coefficient(hierarchy)

 Method of caculate salary by time

Monthly Salary=minimum wage x(salary coefficient+allowancecoef ficient ) Salary pay per month= Minium Wage

Number of day working∈month × Actual working day Salary pay per month= Month salary

Number of day working∈month Salary pay per week= Monthly salary

 Hourly Salary identified by:

+ 150% rate applies to overtime during the working day

+ 200% rate applies to overtime on a weekly day off

+ 300% rate applies to overtime on holidays, paid holidays as prescribed

+ Monthly salary is fixed salaries paid monthly on the basis of labor contracts.+ Weekly salary: the salary paid for a working week, determined on the basis ofmonthly salary (x) for 12 months and divided (:) to 52 weeks

+ Daily salary: the salary paid for a working day determined on the basis of themonthly salary divided by 26

+ Hourly salary: The salary paid for a working hour and is determined by dividingthe daily salary divided by the standard number of hours stipulated by labor laws(no more than 8 hours / day)

 By Product:

 Definition:

A form of direct payment of salary to employees based on the quantity and quality

of products and services that they completed

 Meaning:

Product based pay tied to employees' income with direct production results Forhigh-income workers, the key is to create products and services so that employeeswill seek to improve labor productivity, expertise, innovation promotion, technicalimprovements to contribute promote the movement joint production

 Salary based on direct product:

Salary receive∈the month=Number of completed product X Unit salary

 Salary based on indirect product:

Salary paid to employees indirectly in parts manufacturing, such as maintenance ofmachinery they do not directly create products but they indirectly affect laborproductivity directly, so they are paid based on the basis of the results of directlabor

Overall this forms under indirect products are not accurate, there are manydrawbacks, and not reflec actual result of work

 Advantages:

- Stimulating workers increased labor productivity

- Encourage the training to improve professional skills, accumulated experience andpromote innovation, improve the ability to work

- Promotion of the movement, working to perfect management

 Piece Salary

 Paid under the direct products:

Form of payment are applied in conditions of labor norms on the basis of norms oflabor allocated to individual employees and salary unit This method corresponds tothe norms of production and business plan was chosen as total in-kind products(including products equivalent) usually applied to business enterprises producing or

several kinds of products can be converted and tested obtained a specific productseparately.

Recipe:

U nit salary paid for a unit of completed product = The level of salary of worker

The finished product by worker

 Paid under workload

This form is used to pay for a group of employees when they complete a certainamount of work and apply to jobs that require many participants to complete

 Paid by revenue:

Paid under the form of revenue is also an paid by product form, but because theproduct of the workers in the enterprise is represented by sales revenue per unit oftime Paid in this form is the pay that the salary of both collective and individualworkers depends on the exchange unit by revenue is paid salary for 1000 in revenue(the amount of which the employee receives for 1000 the sales make for company)

Piece salary paid by revenue= Total salary fund plan

- Cons: This form is only paid in line with market conditions stabilize, the price is

no mutation On the other hand, application of this method easy make employeeschasing revenues without regard the business and the low-value items

 Paid on gross profit:

This is a more specific form of Piece Salary paid by revenue When paid in thisform, units have to caculate gross profit take to offset the costs If the lower grossprofit, the basic salary will be low, and vice versa if a large gross profit, theemployee will be entitled to higher salaries Basically, this method overcomes thelimitations of the form of piece salary paid by revenue and make the employees willhave to find ways to reduce costs

Formula:

Piece salary funds pa id on gross profit =Gross Profit Revenue x Real gross profit rate

Pros: This mode makes workers not only pay attention to the increase in revenues

to increase incomes for businesses, but also to save costs, on the other hand mustalso ensure that the interests of workers, State and enterprises

- Cons: Employees often get delayed payment because only when settlement

complete accounting, identify income then determine the actual number ofemployees salary thereby reducing leverage the timeliness of salary

 Form of payment according to the prize

Form of payment is a combination paid by product and bonus Salaries paid byproduct include:

+ Payables under fixed unit price and quantity of the actual product

+ The bonus is calculated based on the level of completion and exceeded the awardcriteria of both quantity and quality of products

Formula:

L( mh) Lth = L +

100

Lth - Salary according to the prize product

L - Salary according to the product with a fixed price

m - % Rate bonus

h - % Rate exceeded the workload

Pros: encourages employees to exceed their assigned targets

Cons: the analysis, consider calculating the bonus targets, bonuses, prize inaccuratesources may increase wage costs

 The form of wage payment under progressive products:

This form of payment is often applied in the main stages in the production that is stitched directly affect the entire production process

chain-This form of payment has two types:

+ Fixed Price: to pay for the actual product has been completed

+ Progressive price: the salaries used to calculate the excess starting products.Formula:

L = dg DG x x Q1 + k (Q1 - Q0)

L - Total salary paid in the progressivity

DG - Fixed unit price per product

k - Ratio increased to have the progressive unit

Q0 - real output comlete

Q1 - starting production in excess

Pros: Encourage employees to increase productivity at the stage primarily to ensurethe production line.

Disadvantages: Easy to make growth rate of salary faster than growth rate of laborproductivity

 Form of payroll by mixed:

This is a paid form of a clever combination between forms of paid by time andforms of paid by product Apply this form of payment, workers' salaries are dividedinto two parts:

Fixed part: This part is relatively stable to ensure a minimum level of income foremployees stable life for themselves and their families This part will be regulatedaccording to the basic salary and the working day of workers in every month

This form of payment is the form that salary and bonus of collective and individualworkers depend on the actual income that businesses gain and income unit

Fluctuate parts: depending on quality of work, the efficiency of individualemployees and the business results of the enterprise

Formula

Fund to payable salaries = Income actual payroll x Unit Price

 Other forms compensation outside salary:

In addition to salary, the bonus is also a very important tool stimulating theemployees In essence, the bonus is an additional sum for salary to more fully graspthe principle of distribution according to labor Through bonuses, workers areadmitted by social enterprise for its achievements, it also cheer for the entireenterprise strives for achievements at work

There are many forms of bonus, different bonus levels all depends on the nature ofwork and the efficiency of production and business of enterprises To promote thework of the bonus, the enterprise need to make material liability regime for casesnot completed the task, causing losses to the enterprise In addition to the prizemoney, the subsidies and other non-wage incomes also have a large effect inencouraging labor

2.3 SALARY DEDUCTIONS

2.3.1 Salary funds

Salary fund is the full amount of salary based on the number of employees by directenterprise management and pay salary, including the following:

- The salary is based on Time

- The salary is based on productivity

- Salaries of-date, piece salary

- Salaries paid to employees making the corrupt within the regulations.

- Salaries paid to employees in production downtime due to objective reasons

- Salaries paid to employees during mobilization work, obligation to work withinthe regulations

- Salaries paid to employees when on leave, to go to school under the regulations

- Cash payment of royalties, lecture

- Rewards frequent nature

- Night-shift allowances, overtime, extra shifts

- Vocational training allowance

- Earnings itinerant work

- Area allowance, seniority trades

- Responsibility allowance

- Allowances for those working in science and technology talent

- Earnings apprenticeship, apprenticeship

- Severance allowance

- Mid-shift meal allowances of the employees

Besides, salary fund also includes expenses for social insurance benefits toemployees in time of sickness, maternity, labor accidents (SI salary payments)

In accounting and economic analysis, salary of employees in the enterprise isdivided into two categories: basic salary and extra pay

- The basic salary: the salary paid to the employee during the employee performtheir main duties include salary paid by rank and salary allowances attached asresponsibility allowances, allowances area, seniority allowance

- Extra pay parts: the salary paid to employees while employees perform tasksbeyond their main task and the time employees are entitled to statutory salary asvacation, holiday because layoffs out, go to school, go to meetings

The division of the salaries into two part have significant meaning of the accountingwork and analyze salary expense items in the product price In accounting work,basic salary of production workers normally charged directly to cost of productionfor each product category Extra salary allocated indirectly on the production costs

of products

2.3.2 Salary Deductions

 Social Insurance Fund

Concept: social insurance fund is used to subsidize the fund for workers tocontribute to the fund in the event they lose their working capacity as sickness,maternity, labor accidents, retirement, and loss of energy.

Source of fund formation: social insurance fund is formed by 26% as aproportion of the total basic payroll and allowances of the employees regularlypractice in the accounting period

The employer must pay 18% of the total payroll and charged to cost of productionand business

Submission of 8% on the total payroll directly by the employee contributions(deducted from their income)

The practical benefits for workers in businesses in the event of illness, occupationalaccident, maternity, calculated on the basis of their daily wage, absent time and rate

of subsidy SI, when an employee is take table of social insurance accountant havemake SI card for each person and make payment to pronoun and pay for socialinsurance funds

Social insurance funds are managed centrally in the employee's account Businessesmust pay social insurance fund deductions in the period into focus fund manage bysocial insurance funds

Purpose use of funds: the fund is used to provide support for workersthat(who) contribute funds

Or according to the concept of the International Labor Organization (ILO) SI isunderstood that it is the protection of society with its members through a series ofpublic measures to combat economic difficulties Assembly by lost or reducedincome, illness caused loss of working capacity

SI is a system of three levels:

Level 1: A base layer to apply to everyone, every individual in society The poor,although their contribution in society is low but when they have required, state stillgive allowance

Level 2: A mandatory floor for those who have stable jobs

Level 3: As the voluntary social insurance for those who want paid SI fee high.About the subject: In Before, social insurance applies only with state-ownedenterprises Now, under Decree 45 / CP, social insurance policy applies to allemployees in all economic sectors (2nd floor) For all members of society (Level 1)and for high-income people or people have condition to participate SI also assignthe contribution provides for the duty to those who are entitled to preferential

treatment The amount that the members contribute will of society members formedclose social insurance fund.

 The health insurance fund

Concept: The health insurance fund is the fund used to subsidize thosewho have contributed funds in medical activities

Source of fund formation:

Businesses deduct health insurance fund as follows:

4.5% on total temporary calculation of income of workers, including:

[1.5% Due to the employees directly pay (deducted from their income), 3%fromenterprise (Calculated on production and business expenses)]

Purpose use of funds: the health insurance fund by the health insuranceagency management, and uniform allowance to employees through health networks,who have paid health insurance participation when they got o medical, and thepayment will be paid through the insurance system which they have paid

 Union funds

Concept: As funding for union activities at all levels

Source of fund formation: labor union fee deducted at the rate of:

2% on the total wages paid to the workers, and businesses have to bear the whole(calculated on production and business expenses)

Purpose use of funds:

50% labor union fee paid to obtain superior trade unions, while 50% left tospend on trade union activities at the unit

 Unemployment Insurance Fund

Unemployment insurance is deducted to allowance for workers who lost their jobs.According to Article 81 of the Social Insurance Law, the unemployed are entitled tounemployment insurance when it satisfies the following conditions: Has paid SocialInsurance 12 months and in24 months before become unemployment Stillcannotfind a job after 15 days from day that register with Social Insurance Organizations.According to the Article 82 of the Social Insurance Law, the monthlyunemployment allowance equal to 60% of the average salary, remuneration onUnemployment Insurance contribution of 6 consecutive months beforeunemployment Source of Unemployment Insurance fund formed as follows: -Employees pay 1% of salary or remuneration on UI contribution - The employershall pay 1% of the fund salaries or remuneration on UI contribution of the workersparticipate in paid UI Every month, the State budget supports equal to 1% of salaryfund, remuneration on UI contribution of the participants UI and moved once a

year So set aside for unemployment insurance rate is 2% of the enterprises in whichemployees paid 1% and 1% now be included in the costs of production and business

NET SALARY= GROSS SALARY- DEDUCTIONS

GROSS SALARY= BASIC SALARY+ ALLOWANCES

The company calculates the insurance and fee deductions only based on basic salary

=>TAXABLE SALARY= (BASIC SALARY- INSURANCE AND FEE DEDUCTION)

Deductions consist of 2 types (according to circular no 111/2013/TT-BTC)

Mandatory: personal income tax, social insurance, health insurance, unemploymentinsurance…

Voluntary: Union fee, charity…

Allowance NOT included: Meal shift (Maximum 680,000), mobile phone, outfit(maximum VND 5,000,000), business fee and overtime premium

Personal income tax calculation:

If the employee only live alone (no debates), the PIT deduction level is 9 millionVND

If he/she has debates, the government will deduct the PIT for 3.6 millionVND/debate (maximum 5-6 debates)

If his/her salary after decreasing all the deductions is still positive, then we applythe PIT calculation hierarchy for taxable salary

-Level 1: < 5 million VND: tax rate 5%

-Level 2: 5-10 million VND: tax rate 10%

-Level 3: 10- 18 million VND: tax rate 15%

-Level 4: 18-32 million VND: tax rate 20%

- Level 5:32-52 million VND: tax rate 25%

-Level 6: 52-80 million VND: tax rate 30%

-Level 7: >80 million VND: tax rate 35%

2.4 ACCOUNTING SALARY

2.4.1 Functions of Payroll Accountant

- Organize and plan to collect fully, correct the initial targets as required on labormanagement for each worker, each unit of labor To accomplish this task, theresearchers need to use the original voucher system of the employees of state thatsuited with management activity requirements and payment for each employee inthe enterprise

- Calculate accurate, fully and timely salary and related items for each employee,each production teams, each contract terms, the state regime, in accordance with therules of business management

- Calculate the exact allocation, reasonable salary amount of salary deductions, inaccordance with the users involved

- Regular and periodic analysis organization employers situation and salary fundindex, providing necessary economic information for the department relating tolabor and salary management

2.4.2 Accounting for labor and labor time

Accounting purposes of labor and labor time in the business, in addition tosupporting the work of management labor administration also ensure calculatepayroll for each employee exactly

The content of the labor accounting including accounting number of employees,working time and labor quality

2.5.2.1 Classification of employees in the enterprise:

In the industrial business, the first job practical work of the management andaccounting of wage labor is labor classification

- Classified by skilled:

Labor classification according to occupational groups, including:

+ Workers performing the function of the main production: As the people who workdirectly by hand or by machine, involved in the production process and the productdirectly

+ Workers perform in subside of production: As the serve for the productionprocess and auxiliary occupations such as direct catering workers directly orindirectly participate in the process of production.

+ Other labor: technical staff, marketing staff, circulation, staff, accountant, securitystaff

+ Level 3 and Level 4: includes workers that through a training process

+ Level 5 or higher: includes workers who have passed school with high technicalexpertise

+ Indirect Labor also has many levels and divided into many part, (eg: as expert

level 2)

+ The classification of labor under wage groups are essential for the arrange laborlayout, staffing in the business

2.5.2.2 Organization labor accounting:

Organization of labor and wage accounting and wage labor, is very essentialthat an indispensable part of the information system's general accounting

- Financial Duties of this business factors are:

+ Organization accounted labor structure existing in the production structure and therecruitment business, fired, transferred in the internal labor relations units according

to demand and supply of labor for the business

+ To monitor the structure and use of workers in the workplace for informationabout the number of workers with quality jobs in the workplace layout

+ Organization of accounting process of calculation salary and payment forworkers

+ To organize the division of labor within a reasonable accounting the accountingelements and labor wages

+ General principles for the implementation of the above tasks organization of laborand wages are Selection and application in the process of implementing thebusiness unit amounts vouchers, books (account) Information to be recorded on thebooks and accounting reporting system of labor reasonable and adequate salaries formanagement requirements, particularly internal management

- The premise necessary for the good organization of accounting informationsystem by wage labor is:

+ To build a rational structure of production This is the premise for the scientificorganization of labor at work to organize the initial recording of the employer.+ Implementation of organized labor in the workplace, the reasonableness of theallocation of labor in the labor position in space and time lines, rank andspecialization is a condition for employment accounted results correctly and on thatbasis calculate pay enough wages to laborers

+ To build standard labor norms for each employee, each type of work and labormanagement system closely both nature personnel, disciplinary rules and laborregulations

+ Must predetermined logical mode of payment and payment mechanismappropriate remuneration can stimulate physical laborers labor in general andaccounting in particular

That mean: It was quantified by real-time wages, by work, by the results of thework done within the framework of the common-mode current

+ Must construction division remuneration principles when it is related to businessactivities, types of products made to calculate the cost of paying the pricereasonable

- Organization of accounting labor, labor time and labor results:

+ Accounting for the number of employees:

To manage in terms of number of employees, companies using labor track records

of business usually managed by the Labor Office This book accounting in terms ofthe quantity of each type of labor by occupation, employment and skill levels(technical grade) of workers Labour Office can make a book for the wholeenterprise, and made for each department to understand the allocation and use ofexisting workers in the enterprise

+ Accounting of working time:

Accounting is essentially the use of working time for each employee in eachdepartment within the enterprise Documents used here is timesheets to recordworking time and can use the direct synthesis in service in time for the management

to use the mobilization of staff time to participate in the labor

Timesheets be made separately for each group, factory, due to the head or heads ofdepartments recorded daily End the end, month timesheets are used as the basis forcalculating wages for salaried employees part-time

+ Accounting of labor results:

The purpose of accounting is to track the results of the labor records of theemployees represented by the amount (volume of work, finished products) of eachperson or each group, the labor group Accounting for the use of original documentsvaries according to the type and characteristics of each business production.

These documents are '' Product delivery slip, work completed '', '' Personalproductivity table records, bills of quantities of work completed "

Accounting documents the results by setting up by worker, technician staffconfirm, leader inspect This is the basis for calculating wages for laborers or wagelabor department that take salary by product

In summary, labor accounting is both to manage the mobilization of employers,should be correct as a basis to calculate the salary paid to the employee So laboraccounted clear, and timely to be able to calculate exact and full salaries toemployees in the enterprise

- Accounting of salaries to workers:

+ Sequencing calculates absolute total employees in the period was paid Toaccomplish this content should have the following conditions:

Have to collect all the documents related to the quantity and quality of labor Have to rely on the documents regulating the pay of salaries, bonuses andallowances of the state

Must construct must pay the appropriate pay forms for each employee beforeentering into the calculation of salaries

To choose a reasonable divided wages for each employee, for the kind of work isdone by a different group of employees different work, rank and work performance + Construction of payment vouchers and other payments related to employees

as payroll and billing voucher This document was completed after theimplementation of the pay for each employee and become the original documents torecord general accounting book and social insurance

+ Selection criteria appropriate to allocate salaries and social insurance foreach subject production costs (based on indirect payroll) and throughintermediaries’ allocation standards for wages subject to the final charge, recordingvouchers for distributed data as a basis of the summary book of accounting inaccordance with the principle

+ Develop relations account book content and calculation of payment ofwages allocated in line with requests for information about accounting subjectsabove

2.4.3 Documents used

Some documents:

- Form 01- LÐTL: "timesheets" This is the basis of vouchers of payment, according

to the actual time worked by each employee The table is set monthly by and each a

by unit time (production teams, departments)

- Form 06 - LÐTL: "Certification cards or work product completed

- Form 07 - LÐTL: "Overtime working paper"

This document is used to account working hours of staff that workers workovertime that mobilized to work outside working time as a basis for calculating theallowances as under the night work or overtime work according to regulations.Beside it also use some other documents such as:

- Form 08 - LÐTL: Labor contracts, the commitment

- Form 09 - LÐTL: Accident investigation report

- Some other relevant documents such as receipts, payment bills…

2.4.4 Account used

To reflect the situation of payment of salary, social insurance, health insurance,labor union fee and UI, accountant use the account as follows:

- Acc 334: Payable to employees

This account is used to reflect the terms and conditions of payment of theconsideration paid to employees of enterprises on salaries, wages, bonuses, socialinsurance and other payables belong emloyees income In the construction businessthis account is also used to reflect the salary paid to laborers hired from outside

• The structure and content reflected of the accounts 334

Debit Acc 334 Credit

- Deductions on salaries of employees

- Salaries, allowances and other ayable

paid to employees

- The transfer of salary of workers does

not field yet

- Generating reduced

- Reflects total salaries and other earnings of employees during the period

Debit balace ( if any): Over pay for

emlyees

Credit balace : Reflecting section

salary and incomes that the businessowes employees at beginning or theend of the period

Acc 334 being divided into two accounts: - 334.1 Payment of salaries

- 334.8 Other receivables

- Acc 334.1: Payment of salaries Is used to reflect the nature of income thatbusinesses pay salaries to employees.

- Acc 334.8: Other Accounts Used to reflect the earnings that don’t have salarynature, such as subsidies from the social insurance fund, the bonus reward from thefunds that businesses pay for workers

2.4.5 Generall acounting for salary

Calculate the salary paid to employees in month and distributed to the

accounting object allocation table set up on the table and from allocations from theaggregated data to accounting records and documents and account ledger in Acc

334 according to transaction:

Debit Acc 622: Costs Direct labor (salary paid to workers)Debit Acc 627: The cost of general production costs indirectly departmentDebit Acc 641: Selling expenses

Debit Acc 642: Enterprise Cost Management (salaries paid to staff officeblock)

Credit Acc 334

 Accounting salary for accruals vacation

Every year under the provisions ,workers are in the list of enterprises that are still

on leave with full pay Leave salary is calculated on the cost of production in areasonable manner because it affects product prices If businesses arrange forregular workers stay in the vacation pay is calculated directly in the productioncosts (such as salaries calculation), if the company can not arrange for workers onleave regularly throughout the year, to ensure non-mutated price increases, salary ofworkers on leave is calculated on the cost of production through accruals asplanned In the end of the year, accountant will make adjustments of accruals asplanned in line with the actual number of vacation wages Vacation pay accruals areonly made for the direct production workers

The rate planned salary for accruals of workers = Total wages paid leave for workerrecruitment as planned during the year / total wages paid to the worker recruitmentplanned for the year

Total vacation salary pay for worker as planned of enterpries= The total employees

of enterprise x The average salary paid for a worker x The number of days annualleave of a worker

 Documents used

- Table of salaries and allowances for employees

- The table is the base pay social insurance payments of social allowances to salarypayments to employees.

- Receipts, payment bills

-Variance if accruals are larger than

the real expenses

-Accruals budgeted and accounted asproduction costs

Credit balance (normal balance):Accruals calculated but not yet incurred

* In case of a number of enterprises with annual leave of workers is irregular ormanufacturing enterprises on the nature of the accounting service must use accrual

of vacation pay workers directly engaged recommended The accruals will beconducted regularly on product cost and treated as an expense to be paid

The calculation is as follows:

Leave salary=Salary actually paid x Deduct ratio payable¿employees

Deduct ratio= Planned vaacation salary of employees

The total planned salary of the employees

 On a monthly basis, when calculating vacation pay accruals of productionworkers, accounting record:

Debit Account 622 - Cost of direct labor

Credit: Account 335 - Payable expenses

 When calculating the actual wage paid leave for worker

Debit Acc 335 Accrued expenses

Credit Acc 334 Payable for employees

 When employees have advance on recording document and ledger,accountant record:

Credit Acc 338

Credit Acc 3335

 When paying salaries for employees, Accountant record

Debit Acc 334 (total salary paid for the whole company)

Diagram2.1 Accounting 334 and corresponding accounts

2.5 ACCOUNTING FOR SALARY DEDUCTIONS

2.5.1 Documents used

Some documents:

- Form 03-LÐTL: Bonus payment table

- Form 04- LĐTL

Beside it also use some other documents such as:

- Form 08 - LÐTL: Labor contracts, the commitment

- Form 09 - LÐTL: Accident investigation report

- Some other relevant documents such as receipts, payment bills…

2.5.2 Account used

Acc 338: Payables and other payables:

Used to reflect in payables and liabilities for law enforcement department, fororganizations, social organizations, the superior of trade union funding, securitysocial insurance, health insurance, salary deductions in accordance with the decision

of the court (child support when divorce, illegitimate child, court costs, ), value ofsurplus assets pending , temporary borrowing, receiving deposits and short-term The structure and content reflect of Acc 338

Debit Acc 338 Credit

Generating reduced

+ Reflects labor union fee spending, SI

units

+ Reflects the payment of social security

funds, health insurance, labor union fee

for superior management agencies

Incurred

+ Reflects the setting up of social security funds, health insurance, labor union fee

+ Reflects part social insurance, laborunion fee overruns are subsidized

Debit balance: reflects the labor union

fee, SI overruns have not been subsidized

Credit Balance : The social

insurance fund, health insurance,labor union fee is not paid or notspending

ACC 338 are detailed account of the account level 2 as follows:

-Acc 3381: Assets awaiting settlement

-Acc 3382: Union fee

-Acc 3383: Social Insurance

-Acc 3384: Health Insurance

-Ac 3387: Revenue received in advance

-Acc 3388: Other payable

-Acc3389: Unemployment Insurance

Beside, acccountant also uses other relevant account during recorded as 111, 112,

138

2.5.3 General Accounting for salary deduction

 When deduct SI, HI, UI, Union fee, accountant record:

Debit Acc 622

Diagram2.2 Accounting 338 and corresponding accounts

Accounting salaries and salary deductions is an important array of accounting, thebasis for businesses to rely on the application of appropriate calculation for theirbusiness

Above is the common basis of the calculation of salary, based on that businessesfind correct ways to suit their businesses to ensure fairness and the propercalculation of wages for workers, each business has a different methods To go intohow the business has applied, we will find the answer in Part 3

CHAPTER 3 CURRENT SITUATION OF PAYROLL

ACCOUNTING AT HBI COMPANY

3.1 OVERVIEW ABOUT HBI COMPANY

3.1.1 Establishment and development of the company

Name of company written in Vietnamese is “HOABINH INVESTMENT ANDDEVELOPMENT CORPORATION”, which can be translate into English as

“HOABINH INVESTMENT AND DEVELOPMENT CORPORATION” andabbreviated company name is Hoa Binh Co., Ltd At the present, company’s headoffice located at 203, Nguyen Huy Tuong Street, Thanh Xuan district, Ha Noi andtrading office at 34, Hai Ba Trung Company was found in 2005 The mainfactories are in Km3, Khac Niem District, Bac Ninh With business registrationnumber is 0104408749

The charter capital of company is 1.302 billion VND Now company work

in some field of business as: Establishment, management and implementation ofinvestment projects in construction: new urban, industrial, infrastructure,residential, Office, public services; Building works: residential, industrial, andurban infrastructure (plumbing, lighting), transport, postal, agricultural, irrigation,sport, culture, entertainment House purchase business, business hotels, culturalservices, entertainment, sport; Advice on investments and housing construction;Consultancy, property management; The real estate business; Associating withorganizations, individuals in and outside the country to business development Inseveral activities above, the main activity of company is real estate business

Comes from a company that specializes in printing and manufacturing ofpackaging, HBI has put out for themselves the appropriate route with long stridesand strategic vision From the first steps, HBI has to concentrate all resources tobuild a foothold in the market in the field of printing and packaging production.With long-term investment goals, HBI has equipped itself with modern technologysystems Advanced technology plus a staff rich in creativity, in just a short time,HBI has established for itself a foothold on the market From a field of aboutpackaging, 2006, HBI has further expanded the investment into the field of plasticinjection and printed on plastic The company's products quickly to meet thedemand of domestic companies, especially companies in the manufacturing sector