internship report tc engineering equipment joint stock company

Table 1: LitCommerce’s Balance Sheet 2019-2021 Table 2: LitCommerce’s Income Statement 2019-2021 Table 3: Business ratio of LitCommerce 2019-2021 Figure 4: Structure of the accounting re

NATIONAL ECONOMICS UNIVERSITY SCHOOL OF ACCOUNTING AND AUDITING

TC ENGINEERING EQUIPMENT JOINT STOCK COMPANY

Student name _: Le Nhat Xuan Student ID : 11185653 Class : Accounting CFAB 2

Supervisor : Dr Le Ngoc Thang

Hanoi, 2022

LIST OF ABBREVIATION

ICT: Information Telecommunications and Technology

MIC: The Ministry of Information and Communications

SaaS: Software-as-a-Service

SMEs: Small and Medium Enterprises

Co., Ltd.: Company Limited

USD: US dollars

IT: information technology

VND: Vietnam Dong

MCQ: multiple choice question

IP: Internet Protocol

HR: human resources

VAS: Vietnamese Accounting Standard

LAN: local area network

LIST OF TABLE AND CHART

Chart 1.1 Chart of Litcommer’s organization

Chart 2.1: Accounting organization structure

Chart 2.2: Chart of the accounting entry sequence in the form of a General Journal

Table 1: LitCommerce’s Balance Sheet (2019-2021)

Table 2: LitCommerce’s Income Statement (2019-2021)

Table 3: Business ratio of LitCommerce (2019-2021)

Figure 4: Structure of the accounting report system

Figure 5: Cash Accounting Process

Figure 6: Example of source document

Figure 7: Example of special journal

Figure 8: Example of general journal

Figure 9: Example of journal ledger

Figure 10: Example of trial balance

Figure 11: Payroll Process

Figure 12: Accounting process for payroll

INTRODUCTION

Information technology is undoubtedly a crucial industry to developing and developed countries alike, regarding the context of 4.0 industrial revolution It is a positive sign that during 2021, the industry remains a key player in Vietnam’s economy Vietnam’s information telecommunications and technology (ICT) revenue recorded an estimated US$120 billion in 2020, a year-on-year increase of 7.1%, according to the Ministry of Information and Communications (MIC)’s report Of this amount, the hardware industry gained a revenue of over US$107 billion while earnings from the software industry reached over US$5 billion and the digital content industry turnover is estimated at over US$900 million, according to the report which takes stock of the ICT performance in the 2016-20 period and sets tasks and orientations for the next 5-year development plan By the end of 2019, the ICT industry has basically completed the targets assigned by the government for the 2016-2020 period, according to the MIC Accompanying the development of IT in Vietnam, LitCommerce has constantly evolved

to adapt and provide customers to top-notch products as well as services

Over 10 years of operation, LitCommerce has positioned itself among the strongest player in the market of providing the most simple and affordable multi-channel selling solution for online brands Despite the ups and downs of the industry, the company proudly maintained its steady development and high customer satisfaction Its success can be largely contributed to efficient internal processes and a well-interconnected organizational structure It is an invaluable opportunity for me, as an intern, to gain a comprehensive understanding of the accounting system in such a company This report reflects on my insight into LitCommerce and its activities, especially in Finance & Accounting Department, along with my personal evaluation of such

Thanks to 3 months of valuable internship at LitCommerce Joint Stock Company, thanks to the wholehearted help of Ms Nguyen Thi Hoa - Chief accountant and accounting staff, I have gained more insights, broaden my knowledge of accounting to be able to fulfill their duties of accounting practice Besides, | appreciate Dr Le Ngoc Thang enthusiastically instructed and guided me throughout the internship process, helping me

to complete this report

My internship report consists of three chapters (exclude: the introduction and conclusion) as follow:

CHAPTER 1: Overview of technical — Economic management and organizational structure about LitCommerce Joint Stock Company

CHAPTER 2: An introduction to accounting organization and system applied in LitCommerce Joint Stock Company

CHAPTER 3: Evaluation accounting organization and system in LitCommerce Joint Stock Company

CHAPTER 1:

OVERVIEW OF TECHNICAL -— ECONOMIC MANAGEMENT AND ORGANIZATIONAL STRUCTURE ABOUT LITCOMMERCE JOINT STOCK

COMPANY

1.1 History of LitCommerce Joint Stock Company

¢ Enterprise’s name: CONG TY CO PHAN LITCOMMERCE

International name: LITCQOMERCE JOINT STOCK COMPANY

Shortened name: LITCOMMERCE

2013

2011

Litcommerce Joint Stock Company was granted a business registration certificate

on December 10, 2011, with the first name OceanSoft Corporation The company's managed by Nam Tu Liem District Tax Department The charter capital is 5,000,000,000 Litcommerce is currently doing business in the following industries: computer programming, software publishing, other information services, market research and opinion polls, retail on request, mail order or internet, other retail sales not elsewhere classified, organization of introduction and trade promotion, retail sale of computers, peripheral equipment, software and telecommunications equipment in specialized stores, wholesale of electronic and telecommunications equipment and components, activities of information technology services and other services related to computers, wholesale of computers, peripherals and software, advertisement, copy records of all kinds, computer consulting and computer system administration, data processing, leasing and related activities The core business activities are computer programming LitCommerce provides technology solutions that allows e-sellers to list and sell products on the largest selling platforms and allow data on these channels to be centrally managed in one place That way, they can easily fulfill their orders from multiple marketplaces and ensure the best customer experience

History of the Foundation and Development of LitCommerce Joint Stock Company

Launched Branch in Tokyo, Japan

Released LitCommerce SaaS Version

Become an Official Member of Vietnam Software & IT Services Association (VINASA)

Become the #1 shopping cart migration service provider over the world

Joined SEA App Shopify Partner Virtual Roadshow

Become #1 Shopping Cart Migration Service over the world

Released the 3rd version of LitExtension

Become the official partner with many eCommerce platform providers including Shopify, Magento, Ship4Shop, X-Cart etc

Launched LitExtension Brand — A Shopping Cart Migration Service

OceanSoft Corporation was founded as a provider of outsourcing services

1.2 Features of business operations

1.2.1 Functions and Responsibilities

1.2.1.1 Functions of company

LitCommerce is the most simple and affordable multi-channel selling solution for online brands Founded by the team that has successfully built and grown LitExtension — the #1 Shopping Cart Migration Expert, LitCommerce has determination to further empower entrepreneurs to efficiently grow their eCommerce businesses

¢ Innovating continuously, diversifying business lines, increasing competitive advantages and expanding markets not only focusing on domestic but also foreign markets

® The operating principle is innovating & acting, transparency & openness, trusting

& sharing, accountability & integrity, concentrating on customer satisfaction, always trying to understand customers’ insights, continuously improving the quality of products and services to better meet customers’ needs

1.2.2 Main business activities

After making the first brand — LitExtension — the world-leading shopping cart migration company, the company realized that its customers need an innovative solution that can help them sell across channels effortlessly instead of through only one website However, most of its customers are SMEs and lacking the human resources to manage too many sales channels That’s the reason why the company developed LitCommerce

LitCommerce is a SaaS system that allows e-sellers to list and sell products on the largest selling platforms and allow data on these channels to be centrally managed in one place That way, they can easily fulfill their orders from multiple marketplaces and ensure the best customer experience

LitCommerce perfectly fits online businesses longing to increase sales rates across channels without operations expansion In recent years, the eCommerce industry has experienced tremendous growth International marketplaces like Amazon, eBay, Etsy, etc are processing billions of transactions per day The growth of these heavyweights in this field has changed the mindset of both buyers and sellers to expand from selling on a single website to multiple channels

1.3 Organizational structure

1.3.1 Model of organizational structure

® LitCommerce., JSC follows functional structure which applies scalar chain Authority should flow vertically down a clear chain of command from highest to lowest rank It means that the managers/seniors assign work to their subordinates and subordinates follow & obey the orders and instructions of their superiors

Chart 1.1 Organisation chart of LitCommerce.,JSC

MARSHALL TRAN SARAH DO

ent Manage Manage

RACHEL VU ASHLEY TA

ChảO nanicetion Menede t

1.3.2 Functions and responsibilities of each department, division and the relationship between departments in company

® The Board of Directors: has an obligation to decide and create the company's organizational structure; appoint or dismiss the chairman of the board of directors, sign or terminate the contract with the General Director / Director / other

important management positions; Assess & generate direction, vision and long- term plan for the company

The Board of Managers: the Managers’ tasks is making the plan for the whole company; assign tasks, manage and supervise to ensure that the whole organization follows the plan in accordance with the directions given by the Board

of Directors In addition, the Board of Managers also offers standards and policies

to develop high-quality human resources for the company, ensuring employees have the best working environment, which is eligible for them to have a clear career path, enough opportunities for personal development

Finance & Accounting Department: functions to advise and assist the Board of Members, General Director of the Corporation in the fields of finance, accounting; capital and asset management; internal inspection and control; cost management and economic performance analysis; Develop annual, short-term and long-term financial plans in line with plans of production, business and investment activities

of the Corporation; Monitoring the implementation of the approved financial plan and proposing adjustment measures suitable to the Corporation's production and business tasks at times; Organize the accounting work, the work of statistics and the statistical accounting apparatus according to the Accounting Law, accounting standards, current regulations of the law and in accordance with the production and business model of the corporation;

Sales Department: Offering effective sales and business plans; advising, researching and implementing market access; Formulating strategies for product introduction and market expansion to attract customers; Plan the organization and implementation of business activities as well as the calculation of cost reports to generate new contracts; Plan to carry out market development and research and product development work, build and develop relationships with customers Administration and Human Resources: one of the important parts of the business, responsible for the management of employees and other departments in the business The duties of the department are to advise the Board of Directors on the arrangement, placement and development of personnel through analyzing the organizational structure, evaluating work results and human capacity; Annually develop human resource plans and strategies for developing human resources for enterprises, calculate budgets related to labor costs (salary fund, traming costs, social insurance, health insurance, uniform costs , .); Development of salary regulations, labor regulations, working regulations and processes, regulations in the recruitment, training, appointment, commendation, discipline, evaluation for with employees in the enterprise, coordinating with the Trade Union to develop the annual welfare and bonus program; Organize and conduct human resource activities in accordance with regulations: recruitment, personnel assessment, work performance assessment, training, salary payment, welfare

Other departments:

Marketing Department: Market research and forecast; Launching new product development programs; Identify market segments, targets and brand positioning; New product development; Develop and implement Marketing strategy; Relations with the media

Technical Department: Design and manage website sales programs; Responsible for the installation and repair of information technology software Planning/Project Department: Coordinate with the drafting department on the unplementation of economic contracts; check and execute the liquidation of expired contracts

Maintenance Department: Receiving periodic tasks from departments and deploying work assignments for technicians; periodically perform maintenance tasks for machines in the factory, receive damaged information from parts and assign workers to inspect, conduct repairs quickly to ensure the progress of the whole plant

1.4 Financial position and Financial Performance of LitCommerce Joint Stock Company

Table 1: LitCommerce’s Balance Sheet (2019-2021)

Unit: million VND

2021 2020 2019

I Cash and cash equivalents 10,222 11,690 6,736

III Accounts Receivable 36,057 89,132 63,210

1 Creditable input VAT 10 0 0

2 Tax and other statutory payable 13 375 294

IL Unearned revenue 9,282 5,257 2,986

NON-CURRENT LIABILITIES 19,838 31,117

III Notes payable and lease obligations 19,677 30,956 23,008

1 Contributed capital 15,620 15,620 15,620

TOTAL EQUITY AND LIABILITIES 80,352 136,707 106,938

Table 2: LitCommerce’s Income Statement (2019-2021)

Unit: million VND

Gross profit margin | % | 57.20 | 57.30 | 57.21

Net profit margin % 0.17 | 0.20 | 0.17

Current ratio Times | 1.24 | 1.12 | 1.19

Quick ratio Times | 0.69 | 0.84 | 0.78

Interest coverage Times | 1.42 | 1.42 | 1.41

GEARING

Liability to asset % 102 | 110 | 109

Liability to equity % 448 | 830 | 658

WORKING CAPITAL

Payable days Days | 88 233 | 207

Receivable days Days | 29 94 84

Inventory days Days | 82 91 127

1.4.1 Financial Performance

Total revenue from both branches of LitCommerce increased significantly by 25% in

2020, but this slowed down to just 6.7% in 2021 Despite this huge stagnancy in growth, the company managed to control costs effectively, maintaining gross profit margin at a stable ratio of 57.2% Significant levels of selling and administrative expenses are incurred each year, but this is effectively kept at roughly 6% of sales Therefore, the increase in this expense is normal and proportional to sales growth Overall, good cost management allowed LitCommerce to maintain net profit margin at 0.17% in 2021, same

as 2 years ago, despite the growth stagnancy This ratio seems marginal but is consistent throughout the company’s operating history

Profitability is also looking positive from the investors’ perspective ROE fluctuated slightly through 3 years but seems stable due to consistent level of retained profits and owners’ capital ROA increased very slightly to 0.51% due to LitCommerce managed to collect nearly 70% of its trade receivable in 2021 The resulting cash allowed LitCommerce to settle 60% of its trade payable and 36% of its loan, improving ROCE by 41% compared 2019 These may encourage future funding by investors

1.4.2 Financial Position

Despite significant liability settlement, there has been little improvement in short-term solvency at LitCommerce Current ratio increased slightly from 1.12 to 1.24 times, but quick ratio deteriorated This ratio has been constantly below | for the company, which signifies inability to meet short-term obligations in case inventory is slow-moving Interest coverage is still stable at 1.42 times for LitCommerce, and this 1s expected to unprove greatly in 2020 considering a great portion of debt has been redeemed The ratio of liability to asset has reduced slightly from 110% to 102%, as both long-term liability and asset decreased However, the ratio staying above 100% is worrying, meaning assets are largely financed using debt and when debts fall due, there may be difficulty obtaining cash for repayment Similarly, liability to equity ratio, also known as gearing, is at 448%, staggeringly exceeds the safety threshold of 50% This indicates a risky financial structure as LitCommerce is excessively funded by external sources, which goes with high risk of default and liquidation However, there has been great efforts from the company’s management to settle some loans, effectively reducing gearing by nearly 50% from 2020

Working capital management at LitCommerce became more effective during 2021 As discussed above, effective collection procedures lowered receivable days from 94 to 29, less than a third of 2020’s figure The cash is appropriately used for settling payables and reduced payable days to also a third This 1s likely to improve supplier relationships, encouraging better credit terms in the future Inventory turnover also decreased slightly

by 9 days, in line with the slowing down in growth

CHAPTER 2:

AN INTRODUCTION TO ACCOUNTING ORGANIZATION AND SYSTEM APPLIED IN LITCOMMERCE JOINT STOCK COMPANY

2.1 Structure of accounting organization

e Accounting organization structure model

The entity applies the centralized accounting structure, recording and aggregating transactions are performed in the accounting department

Accounting Department with the function of performing professional work on financial accounting, recording, calculating, reflecting existing numbers, the situation of rotation and use of assets, materials, capital; process and results of production and business activities and use of capital of the Company; To inspect the implementation of the production and business plan, the financial revenue and expenditure plan on the collection, payment, payment, and to inspect the preservation and use of assets, materials and capital; detect and promptly prevent wasteful phenomena, violations of the Company's regimes and regulations; Providing data and documents for operating production and business activities, examining and analyzing economic and financial activities, serving the formulation and monitoring of plans Supply reporting data to relevant agencies according to the current accounting and financial reporting regime; Report business results to the Board of Directors of the Company

Accounting Department is made of Chief accountant, general accountant, material and goods accountant, debt revenue accountant, salary accountant, tax accountant and cashier

Chart 2.1: Accounting organization structure

Functions and responsibilities for each position in accounting organization Chief Accountant — Ms Nguyen Thi Hoa: Responsible for managing all accountants in the accounting department, ensuring work progress and performance in businesses and branches, providing timely reports to leaders and providing comments, opinions to help leaders handle emerging issues effectively and promptly; supervise the settlement of revenues and expenditures, organize an inventory of assets, cash flow of the enterprise at the end of the fiscal year; ensure accuracy, timeliness and legality in documents, accounting books, payment papers,

financial statements, statements, balance sheets, insurance, bank liabilities, customers as well as investors; responsible to the auditor for the records and documents of the business

General Accountant — Ms Ngo Thi Nhung: Responsible for recording and synthesizing data on import, export and consumption of finished products, types of capital, types of funds, determination of profit and loss results, payments to the state budget with banks, with customers and factory internal; Record in general books, make balance sheets and reports under their responsibility and some general reports that are not in the tasks of the above departments, including investigation reports, estimates; Check the accuracy and truthfulness of the enterprise's reports before the director signed for approval; Helping the chief accountant make analysis reports on economic activities of the unit; Preserve and store records, documents, accounting data - statistics, economic information and provide documents to relevant departments and agencies

Material and goods Accountant — Ms Ha Thi Na: Making initial documents (amport bill, export note) based on source document, valid original vouchers; monitoring the use of materials and goods according to norms and regulations in order to promptly detect unreasonable matters; reporting the use status and inventory of materials and goods to support inventory counting and settlement, have a reasonable purchase plan, and promptly improve the business efficiency Revenue and debt accounting — Ms Le Thi Lieu: Debt tracking, debt collation, debt collection planning to pay money to suppliers; tracking sales revenue of the whole company, making a sales list according to the report form; tracking the contract and making a record of contract liquidation

Salary accountant — Ms Ngo Thi Nhung: Keeping track of time attendance for employees; Recording and calculating salary and salary deductions for employees Tax accountant — Ms Le Thi Lieu: Fulfill obligations to declare tax on the State, issue VAT invoices for sold goods, update information on tax policies, and perform other tasks as assigned by the Director

Cashier — Ms Ha Thi Na: Receiving cash from the bank and collect other payments; paying in cash according to the payment slip, attached with the orginal documents approved by the director and manager; making daily statements and monitoring cash income and expenditure

2.2 Features of Accounting System

2.2.1 General Accounting Policies

The accounting system is applied according to TT133/2016TT-BTC issued on 08/26/2016

Accounting form: General Journal form and is supported by MISA accounting software