GENERAL THEORY OF ACCOUNTING FOR SALARY
OVERVIEW OF ACCOUNTING FOR SALARY AND PAYROLL
1.1.1 Definition of salary and payroll related compensations
- According to Marxism's theory: Wage is a living expression of money of labor value.
- In the view of modern economists: Salaries are prices of labor, determined by the supply and demand relationship in the labor market.
In Vietnam's central planning era, salaries were viewed as a portion of national income designated to cover labor costs for public employees, governed by state regulations Today, under Article 55 of the Vietnam Labor Code, employee salaries are determined through mutual agreement in labor contracts, reflecting labor productivity, quality, and efficiency.
Salary represents the monetary compensation paid to employees for their labor, reflecting both the quantity and quality of their work Proper regulation of salaries serves as a powerful motivator, encouraging employees to enhance their skills and adopt advanced technologies, ultimately leading to increased labor productivity.
Employees receive salaries in exchange for their labor, which can be viewed as a unique commodity This labor power is traded in the labor market, where its value is determined by the principles of supply and demand Consequently, salaries represent the price of this special commodity, reflecting the agreement between employers and employees.
The price of labor is influenced by the costs of its constituent elements and the dynamics of labor supply and demand Wages are established through mutual agreement between employers and employees, reflecting the value of labor Consequently, salaries can rise or fall based on the availability of labor and the demand for it, often experiencing fluctuations However, these wage rates should align with the true value of labor power and essential goods, ensuring a fair calculation Additionally, it is crucial that wage fluctuations maintain a minimum living standard for workers, enabling them to sustain their livelihoods and continue their employment.
Definition of payroll related compensations
Payroll related compensactions include: Social insurance, Health insurance, Labor union, Unemployment insurance
Social insurance is a crucial component of social policies, legally guaranteed by the state for all citizens, particularly workers It serves as a financial safeguard, ensuring stability for workers and their families during challenging times Funded by contributions from employees and employers, social insurance provides essential support in cases of illness, old age, maternity, labor accidents, unemployment, and death.
- So, the social insurance fund is a fund used to subsidize workers who contribute to the fund in cases where they are incapable of working, sick, maternity, etc.
- Under the current financial regime:
For Vietnamese employees, the social insurance fund is calculated by deducting 25.5% of the total salary fund, of which 17.5% is deducted from enterprise expenses and 8% is deducted from employees' salaries;
For foreign workers, the social insurance fund is established by deducting 3.5% from the total salary fund, with this entire amount being the responsibility of foreign businesses Consequently, foreign workers are not required to make any contributions to the fund.
Health insurance is a monthly payment made by both employees and employers to health insurance agencies, ensuring coverage for medical examinations and treatments This fund is established by deducting 4.5% from the total wage, with 3% accounted for in production and business costs and the remaining 1.5% contributed by employees This contribution rate applies to all workers, including both Vietnamese and foreign nationals.
Health insurance is a comprehensive financial investment made to a specialized agency, ensuring the health and well-being of workers This coverage facilitates essential services such as medical examinations, treatments, and care for illnesses, providing peace of mind and support for employees' health needs.
Unemployment insurance is a key policy implemented by the Party and State to enhance social security in our country Its primary aim is to provide financial support to workers who have lost their jobs or ended their employment contracts, facilitating their transition to suitable and stable new positions as quickly as possible This insurance fund is generated through a 2% deduction from total wages, with 1% covered by employers and the remaining 1% contributed by employees Notably, as stated in Clause 1, Article 3 of the 2013 Employment Law, foreign workers in Vietnam are exempt from participating in unemployment insurance.
A labor union fund is essential for the operation of both unit and superior trade unions, which are dedicated to safeguarding workers' rights and enhancing their living conditions This fund is generated by deducting 2% from the total salaries of employees and is factored into the production and business expenses of the organization Trade unions are responsible for managing these funds effectively.
To enhance labor management, it is essential to optimize workforce allocation and utilization, as well as refine the salary structure Implementing effective social insurance, health insurance, labor insurance, and unemployment insurance programs serves as a powerful incentive for workers to remain committed to their production and business roles These measures not only boost skills development but also significantly elevate labor productivity.
1.1.2 The function of salary and the task of accounting for salary
The function of salary a Characteristics and functions of salary
Salary is the input factor of the production and business process, is the advance capital and this is an expense in product cost
Function of reproducing labor power:
During the labor process, human effort is inevitably diminished as products are created To sustain and enhance workers' productivity, it is essential to reproduce the labor force Consequently, salary plays a crucial role as it compensates for the depletion of labor and meets the consumer demands of employees, thereby facilitating the regeneration of the workforce.
Function as management tools of enterprises
For managers, salary serves as a crucial tool for effective business management By compensating employees, employers can monitor and supervise their performance in alignment with organizational goals To ensure that salaries yield high results and efficiency, it is essential for managers to implement strategic salary structures that drive productivity.
- For businesses, salary a reasonable and valid expense which is included in the production and business costs and product costs, accumulated to pay employees.
Labor stimulating function (economic leverage)
A competitive salary is essential for boosting productivity and enhancing employee engagement When employees are compensated fairly, they are more motivated and committed to their work, fostering a culture of creativity and responsibility that aligns their interests with the goals of the business.
Salary plays a crucial role in meeting workers' needs, serving as their primary source of income It is essential for businesses to provide competitive salaries to ensure a minimum standard of living for their employees, who are vital to the production process Additionally, salaries represent a significant expense for businesses, reflecting the value of the products and services created by their workforce.
THE BASIC CONTENT OF ACCOUNTING FOR SALARY AND
PAYROLL RELATED COMPENSATIONS IN ENTERPRISES
1.2.1 The form of salary payment in enterprises
Salaries are calculated based on the actual labor days worked and the established wage scale for employees This payment structure takes into account both the duration of work and the technical skill level of each worker.
This form is primarily used for management personnel, such as office staff and business managers, as well as production workers in machinery-related roles It is particularly relevant for jobs that cannot be accurately evaluated due to their nature, where paying by product could compromise quality and fail to yield practical results.
To pay salary over time, people base on three factors:
- Actual labor days of employees
- Salary unit price calculated according to workdays
Monthly salary = Minimum salary x Salary coefficient
Number of working days ∈a month
Salary payable in the month
Number of actual working days in the month of the employee
Monthly salary Number of working days ∈a month Overtime pay = Hourly salary x Hourly salary coefficient x Overtime hours
The hourly salary coefficient is determined as follows:
- The 150% rate is applied to overtime working days.
- The 200% rate is applied to overtime working on weekends and holidays.
- The 300% rate is applied to overtime working on holidays and days- off paid according to regulations
Payment methods vary based on the quantity and quality of products and services provided, reflecting the unique characteristics and production conditions of each enterprise.
This method is utilized to establish labor norms for individuals and to calculate wage unit prices, aligning with the production and business plan objectives It is typically employed by enterprises that produce and trade one or multiple types of products, allowing for the conversion and testing of these products in a specific manner.
Salary payable in the day Unitwage per ¿ Salary rank of employees
Salary payments linked to product rewards are designed to motivate both direct and indirect workers to enhance productivity and material efficiency This system incentivizes employees to meet production targets and maintain high product quality, ultimately driving overall performance and success within the organization.
Salary payment through progressive products involves compensating employees with a direct product payment alongside a progressive bonus, which is determined by the level of completion of specific norms This system applies to both individual employees and groups, ensuring that compensation is aligned with performance Additionally, salaries are distributed based on final product contracts, enhancing clarity and accountability in the payment structure.
Contracted salaries based on workload are applicable to jobs requiring completion within a specified timeframe When utilizing this salary calculation method, it is crucial to monitor both the progress and quality of work during the pre-acceptance testing phase This is particularly important in construction projects, as hidden aspects of the work may be challenging to identify upon accepting the completed work volume.
A form of payment when employees complete a workload according to the assigned quality.
It is applied in conditions of no labor norms and no contract to employees.
This form is applied to pay a group of workers when they complete a certain amount of work and apply for jobs that require a lot of participants to do.
Salary = Package wage x Percentage of job completion
This payment structure seamlessly combines hourly wages with performance-based compensation Under this system, an employee's salary is divided into two distinct components, ensuring a balanced approach to remuneration.
The minimum salary serves as a stable foundation to guarantee essential income for workers, ensuring they can support themselves and their families This salary component is determined based on the employee's basic salary and the number of working days in each month.
This is a form of salary payment where the salaries and bonuses of collectives and employees depend on the actual income achieved and the unit price by income.
- Fluctuation parts: depending on the productivity, quality and efficiency of each individual employee and the business results of the enterprise.
1.2.1.5 Other forms of remuneration other than salary workers In fact, the bonus is an additional amount of money to better understand the principle of labor distribution.
Through bonuses, employees are recognized in the business and society for their accomplishments, and it encourages the whole enterprise to strive to achieve many achievements in their work.
Various types of bonuses are linked to the nature of work and the efficiency of business operations To enhance the impact of these bonuses, companies should establish a material liability system for instances of unmet tasks that lead to losses Alongside bonuses, subsidies and other non-wage earnings play a significant role in motivating employees.
The total salary fund of an enterprise is determined by the number of employees and encompasses key components such as salaries for actual working hours, payments during work stoppages, vacation time, and educational leave Additionally, it includes various types of production-related salaries and regular allowances, such as extra work, vocational training, responsibility, and seniority allowances.
- Main salary fund: calculated according to workload completed or actual working time of employees at the enterprise such as time-based salary, product salary, bonuses based on salary, allowances.
The main salary refers to the compensation provided to employees while they carry out their primary responsibilities This salary encompasses the base pay according to their job level, along with various allowances such as responsibility, area, and seniority allowances.
The extra-salary fund compensates employees for periods when they are not actively working at the enterprise but are still entitled to receive their salary, as mandated by current Labor Law This includes scenarios such as leave, holidays, and instances of machine failure, ensuring that employees are financially supported during these times.
Extra salaries refer to the additional compensation provided to employees for tasks outside their primary responsibilities or during periods when they are not actively working, such as during leave, production halts, training sessions, or meetings.
Source for forming salary fund:
Salary fund according to assigned unit prices.
Reserve salary fund from the previous year (if any).
Salary fund from other production - business and service activities in addition to the salary unit price.
Salary fund supplemented from the remaining salary of the year, quarter, and previous month.
To prevent the salary fund from surpassing the entitled wage fund, it is advisable to accumulate the salary fund during the final months of the year or to maintain a substantial reserve The total monthly salary fund should be allocated in a strategic manner to achieve this goal.
Salaries paid directly to employees according to product salaries, workload salary and time salary is 76% of the total salary fund.
Salary bonus is 12% of total salary fund.
ORGANISATION OF BOOKKEEPING SYMSTEMS FOR
SALARY AND PAYROLL RELATED COMPENSATIONSACCOUNTING
1.3.1 Accounting books used in accounting for salary and payroll related compensation
Accounting tasks within an accounting unit are increasingly complex, influenced by the volume of operations and the specific requirements of each accounting component To effectively manage this complexity, accounting units must utilize various types of ledgers, each tailored in structure and content to meet distinct accounting methods This creates a cohesive system of accounting books that closely aligns with the sequential flow of each accounting function.
Accounting books are essential for documenting, organizing, and storing all economic and financial transactions of a business, arranged by their economic significance and chronological order Each enterprise maintains a single accounting book system for each accounting period.
Enterprises are required to adhere to the regulations outlined in the Accounting Law, specifically following the guidelines established by Government Decree No 129/2004/ND-CP, dated May 31, 2005 This decree provides essential instructions for implementing the Law on Accounting in business operations, along with any relevant documents that offer further guidance and amendments to the law.
Businesses must create their own accounting book formats while ensuring that information regarding economic transactions is transparent, comprehensive, easily verifiable, controllable, and comparable If they choose not to develop their own formats, enterprises may utilize the accounting book forms outlined in Appendix 4 of this Circular, provided these forms align with their management characteristics and trading activities.
Enterprises should create customized accounting book formats that align with their operational characteristics and management needs, ensuring all transactions are recorded accurately and promptly for easy verification and comparison If they choose not to develop their own formats, they can utilize the accounting book formats outlined in Appendix 4 of this Circular, provided these formats suit their management and operational requirements for financial statement preparation.
Accounting books include general accounting books and detailed accounting books
1.3.1.2 General accounting books include journal and ledgers
The general journal serves as a crucial tool for recording financial and economic transactions within an accounting period, capturing the interrelations of various accounts It provides a comprehensive overview of the total amounts recorded on both the Debit and Credit sides of all accounts utilized by the company, ensuring that all relevant information is accurately reflected.
The number and date of accounting vouchers used as a basis for recording
Summary of the contents of transaction
The ledger serves as a crucial tool for documenting financial and economic transactions that occur within each accounting period and year, adhering to the prescribed accounting regulations for enterprises The figures recorded in the ledger provide insights into the company's asset and equity status, as well as its income statement.
The ledger must fully reflect the following contents:
The number and date of accounting vouchers used as a basis for recording
Summary of the contents of transaction
Detailed accounting records encompass both books and specific accounting cards These tools are essential for documenting economic and financial transactions related to accounting objects, ensuring that details are monitored in accordance with management requirements.
Data on detailed accounting books and cards provide information for the management of each type of asset, net assets, revenue, expenses not yet reflected in the journal and ledger.
Businesses have the flexibility to choose the quantity and texture of their detailed accounting card books They can utilize the forms outlined in Appendix No 4 of this Circular or modify these forms and accounting cards to align with their operational and management needs, ensuring that the final product remains sufficient, clear, and easy to manage.
An accounting system serves as a structured framework for businesses to manage their financial records effectively This system is a combination of various accounting books that enable the recording, structuring, and reflection of financial data based on original documents Different enterprises, depending on their type, size, and accounting needs, will adopt unique forms of accounting book organization to best suit their operational requirements.
Accounting books related to salary and payroll related compensation used include:
- Detailed book of accounts 334, 338: recording the arising of payable to employees;
- Detailed book of accounts 154, 6422: recording expenses incurred related to salary and salaries;
- Detailed book of accounts 111, 112: recording the amounts paid to employees
The financial reporting system of the company applies according toCircular 133/2016/TT-BTC of the Ministry of Finance, including:
Balance sheet - Form No B01-DNN
Income statement - Form No B02-DNN
Notes to the financial statements - Form No B09-DNN
Balance sheet account - Form No F01- DNN
In financial statements, information about accounting for salary and payroll related compensation is presented in some kinds of financial statements below:
Balance sheet: Information is shown in some norms below:
Payables to employees (Account 334) represent the amounts that businesses are obligated to pay their employees at the time of reporting This figure is determined by the credit balance recorded in Account 334, highlighting the company's liabilities towards its workforce.
Other short-term payables encompass liabilities due within 12 months or one operating cycle, including payments for unaccounted asset surpluses, social insurance contributions, trade union fees, and amounts received from short-term deposits The figures in this category are derived from detailed records, ensuring accurate financial reporting.
Credit balance of accounts: 338, 138, 344 and some other accounts.
Other long-term payables refer to liabilities with payment terms exceeding 12 months, encompassing various items such as long-term deposits, long-term loans, and discrepancies between deferred installment sale prices and long-term cash prices The figures recorded under this category are derived from detailed account balances, specifically accounts 338 and 344.
Income statement: Information is shown in some norms below:
Salary costs are categorized into two main units: the costs of goods sold (Account 632), which includes labor costs exceeding the normal level and unallocated fixed overhead costs added to goods during the period, and business administration expenses (Account 642).
Account 6421 covers salary expenses for administrative, sales, transportation, and maintenance staff, encompassing salaries, meal allowances, social insurance, health insurance, union fees, and unemployment insurance In contrast, Account 6422 focuses on salary expenses for management, detailing amounts payable including salaries, allowances, and social insurance contributions.
Cash flow statement (under direct method): Information is shown in some norms below:
ACCOUNTING FOR SALARY AND PAYROLL RELATED
COMPENSATION IN THE APPLICATION ACCOUNTINGSoftware accounting form
Diagram 7 : Diagram showing salary accounting and salary compensations in the form of machine accounting
Through chapter 1 presented above, we can clearly see the objective necessity of accounting for salary and payroll related compensation in businesses.
When managing salary and payroll compensation, it is essential to adhere to the relevant circulars and accounting standards This process should be flexible, taking into account the specific characteristics of the business, its salary calculation methods, and accounting practices Such an approach ensures convenience and meets the monitoring and management needs of each organization.
From the above reasons, I found that it is really important to study salary and payroll related compensation
Chapter 1 outlines the whole theory of salary and payroll related compensation, through which we can understand the concepts, content and calculation methods The practice of salary accounting, payroll related compensation at IC&PARTNERS Vietnam Company Limited will be presented in chapter 2.
ACCOUNTING FOR SALARY AND PAYROLL RELATED
Overview of the company
IC&PARTNERS VIETNAM COMPANY LIMITED (ICP) is a professional financial, accounting, tax health check, tax consulting, transfer pricing and other consulting for daily business operation.
2.1.1 The foundatig and development of company
Trading name: IC&PARTNERS VIET NAM COMPANY LIMITED
Short name: IC&PARTNERS VIETNAM CO., LTD
Registered address: 5 th Floor, N02 Building, Goldeason Complex 47 Nguyen Tuan Str, Thanh Xuan Trung Ward, Thanh Xuan Dist, Ha Noi, Viet Nam
Legal representative: Ta Thi Thanh Thuy
IC&PARTNERS VIET NAM Co., Ltd, established in 2015 with business license number 0107012135, operates under the oversight of the Ha Noi city Department of Planning and Investment The company specializes in management consulting activities, providing expert guidance to enhance business operations.
IC&PARTNERS Viet Nam Co., Ltd, part of the IC&PARTNERS Group, is a consultancy firm specializing in the internationalization of businesses and operates in 17 countries worldwide Established in Hanoi, it supports companies looking to expand their operations in Vietnam and Myanmar As a key player in the Asian market, IC&Partners Vietnam collaborates with IC&Partners Asia, which has offices in major cities including Hong Kong, Beijing, Shanghai, and Shenzhen.
Through 4 years in operating, the company has 5 times registration The above address is the 5 th registration and this is convenient place for all activities of business because It is adjacent to the main road, easy to go to the customer’s company The first registration, the company has the name in Vietnamese is Cong ty TNHH Dai ly thue va tu van TAF Viet Nam (Abbreviation name: TAF Viet Nam Co., Ltd), then in December 23th
2019, IC&Partners Co., Ltd bought 50% whole company so TAF Viet Nam has changed name become IC&PARTNERS Viet Nam Co., Ltd
ICP's operations comply with the Professional Standards and are managed by the Ministry of Finance of the Socialist Republic of Vietnam.
The company employs a total of 10 individuals, including 8 university graduates and 2 ACCA-certified professionals Over the past four years, this skilled workforce has consistently delivered high-quality service, earning strong appreciation from customers.
2.1.2 Characteristics of business operation of company a Specialized services in ICP
Guidance on the application of accounting and financial regime
Building organizational models - organizing accounting work
Opening, recording accounting books and making financial statements
Assisting Clients to make VAT, CIT and contractor tax declarations
Advising on personal income tax settlement(PIT)
Answering tax problems of businesses
Providing tax documents for businesses
Preparing records and procedures for tax exemption or reduction
Consulting on setting up internal control system, building financial regulations
Consulting on cost-saving management of businesses
Consulting management of salaries and personnel
Other services Transfer pricing advisory service b Operational objectives:
ICP is dedicated to prioritizing customer interests by offering specialized services in financial management, accounting, transfer pricing, customs, tax health checks, and tax consulting Our goal is to deliver reliable information that empowers clients to make informed economic and financial management decisions effectively.
+ Cooperation, trust, honesty and complying with the laws and regulations of the State of Vietnam, Vietnamese accounting standards as well as internationally accepted accounting standards.
+ On time – Fast: The requested work will be completed in accordance with the expected agreement.
+ Dedication – Security: ICP commits that customers will keep all business information confidential even when the service expires.
+ Always put the legitimate interests of customers first. d Service approach
+ ICP's activities are to provide financial accounting services, tax, transfer pricing, customs to all businesses and organizations operating in Vietnam.
ICP's accountants are dedicated to delivering exceptional service through effective practical applications The organization focuses on enhancing business efficiency by implementing proven methods and continuously sharing valuable knowledge with its clients.
2.1.3 Characteristics of organizing management mechanism
There are three departments in company: a Board of Directors
General Director: Ta Thi Thanh Thuy
Vice president: Phan Thanh Hang
The General Director oversees all business operations and personnel, playing a crucial role in managing cooperative activities A key responsibility of this senior position is to devise and execute strategies that enhance the company's growth and profitability.
Chief accountant: Vu Thi Thu Ha
General Accountant: Pham Thi Ninh Chi
The accounting department plays a crucial role in any business by accurately recording and calculating all economic activities, determining monthly business results, and facilitating financial planning In service-oriented enterprises, economic activities are relatively straightforward, primarily focusing on service provision, salary calculations, and managing salary deductions.
Include 5 Counselors and 1 Financial experts.
The consultants perform the tasks assigned by the team leader - the financial expert in order to complete the accounting and finance consulting jobs required by the contract.
2.1.4 Characteristics of organizing accounting system
2.1.4.1 Organisation of accounting apparatus a) Function of accounting apparatus
- Observe, receive and record systematically daily business activities of arising economic operations and other economic events.
- Classify economic events into different groups and categories, this classification works are to reduce the large volume of details into compact and useful forms.
- Summary of classified information into accounting reports to meet the requirements of decision makers.
The accounting process encompasses the transmission and interpretation of essential financial information, which aids the Board of Directors in making informed business decisions Additionally, a well-defined organizational structure is crucial for effective accounting operations.
The chief accountant plays a crucial role in overseeing and guiding accounting practices in line with the Ministry of Finance's regulations This position involves synthesizing and analyzing financial information to provide timely and accurate insights that assist leadership in making informed business decisions Ultimately, the chief accountant is accountable to the director for the precision of accounting data and the operational standards of the accounting department.
A general accountant plays a crucial role in synthesizing and summarizing accounting data, preparing comprehensive transfer reports for the chief accountant, and ensuring these reports are delivered to the director on a quarterly basis Additionally, the general accountant is responsible for reorganizing the workflow of the accounting team to enhance efficiency and accuracy in financial reporting.
A Payable Accountant is responsible for managing the company's revenues and overseeing the collection of receipts and payments, whether through cash transactions or bank transfers This role involves diligently tracking various liabilities, including those owed to customers, internal obligations, and other forms of debt.
2.1.4.2 Accounting regimes and policies applied a Accounting regimes:
The company applies the enterprise accounting regime issued in accordance with Circular 133/2016/TT-BTC dated August 26,2016 of the Ministry of Finance (Small and medium enterprise accounting system).
The annual accounting period starts from January 1 st to December 31 st Time period of Financial Statement preparation: 12 months. b Accounting policy:
Principle of recording and depreciating fixed assets:
- Principle of recording fixed assets: at historical cost
- Depreciation using the straight-line method
Tax policy - Amounts payable to the State budget
- Value-added tax (VAT): applied by tax deduction method.
Personal income tax is governed by the prevailing regulations set by the State, and the amount owed must be settled with the local tax authority for the designated period.
2.1.4.3 Form of bookkeeping and accounting software applied a Word
Word is a popular word processor in the world It allows users to work with text, effects such as fonts, colors, tables, etc., making text editing easier.
In ICP, accountants use Word software to draft Financial Regulations,Labor Contracts, Quotations, Service Contracts and other legal documents.
Excel is a premier calculation tool recognized globally, featuring an intuitive spreadsheet interface that enables accountants to efficiently create detailed ledgers and perform calculations with speed and precision Additionally, Excel offers robust functions for handling large datasets, significantly enhancing the efficiency of accounting tasks.
In ICP, the accountant uses excel software to process data from the timekeeper and set up the timesheet Since then, it created a payroll for employees. c MISA software
ICP utilizes MISA software for accounting, streamlining the accounting process through computer-based applications This method eliminates the need for manual bookkeeping, allowing accountants to efficiently sort and extract information from original documents entered into the software By analyzing data from general and detailed books, as well as financial statements, accountants can make informed decisions based on accurate and organized information.
Human resources in ICP
2.2.1 Characteristics of labor in ICP
The Company specializes in delivering comprehensive accounting and tax services, along with global solutions such as transfer pricing support and customs assistance With a strong emphasis on efficient human resource organization, the Company ensures optimal resource allocation, matching the right talent with the right roles to maintain high-quality service delivery ICP's dedicated staff has successfully implemented a variety of specialized services for numerous organizations and units.
ICP employs accountants who have undergone training in financial accounting and tax through prestigious organizations such as ACCA (The Association of Chartered Certified Accountants) and VTCA (Vietnam Tax Consulting Association) These professionals have also engaged in research and surveys on accounting, tax, and management practices in countries with established expertise in tax and finance.
2.2.2 Classification of labor in the company
In enterprises of different business sectors, the classification of labor is not the same, depending on the requirements of labor management in specific conditions of each enterprise.
At ICP, employees are divided according to their functions during the company's employment.
Specifically, labor in ICP is divided into:
- Administration: Including people with certain professional skills, who are responsible for managing the operation of the departments so that the departments can work and collaborate most effectively.
- Financial accounting team: Specializes in accounting consulting and financial management for businesses.
- Tax accounting team: Tax health examination for businesses, tax advisory, providing tax refund services for VAT, PIT, CIT, FCT.
- Financial experts act as a consultant for the accounting services provided by the company globally.
2.2.1.1.Managing labor through Staff information
(dd/mm/yyyy) Place of birth Permanent Address Present Address Telephone Number
Date of entering the ICP Division
Personal Tax Code E-mail address
Each employee in the company will have a unique code, serving in the process of tracking timekeeping, payroll, payroll and some other content
To assign employee codes, numbers should be allocated in ascending order based on the duration of their employment In cases where two employees start simultaneously, the individual with the higher job position receives the lower sequence number.
Examples of employee codes are as follows:
Name Time into the company Code
2.2.1.2.Managing labor through working time
Labor time management is to monitor the use of working time for each employee in each part of the company
Managing labor time and serving the management and use of labor time, as well as the basis for calculating salary for employees.
The company employs timekeepers to ensure accurate tracking of employee hours Each day, employees are required to actively manage their timekeeping When leaving the office for work-related activities, such as client meetings or fieldwork, it is essential to inform Management or a person of equivalent rank and to log this information on the company's shared calendar.
The Timekeeper is strategically positioned at the company's internal door, allowing employees easy access for timekeeping At the end of each month, attendance sheets are generated using the data collected from the timekeeping machine, ensuring accurate records of employee attendance.
The attendance sheet data enables group leaders and the Board of Directors to evaluate employee attendance and punctuality, providing insights into how working time is utilized within the company This information is crucial for making informed decisions regarding the optimal arrangement of the organization's human resources.
2.2.1.3.Labor results management in ICP
Labor results management serves as the foundation for calculating individual or collective salaries based on product output, while also assessing labor productivity It involves overseeing labor outcomes in relation to the extent of work completed.
Based on daily time reports, monthly time reports.
At the end of the day, all employees must submit time reports according to the available format of the company as follows:
Weekly reports should be sent to the internal email address info@icpartnersvietnam.com to monitor each employee's weekly work activities This process will help evaluate staff performance, assess the quality of their work, and track job progress effectively.
Work completion levels serve as key indicators for managers to assess employee performance effectively This evaluation enables the development of targeted training programs aimed at enhancing staff skills and capabilities, ultimately fostering professional growth.
In addition, the job report is considered as a basis for determining the amount of bonuses for employees corresponding to the work in each job they undertake.
The time report enables the Board of Directors to assess employee workload and productivity, helping to identify whether staff members are overburdened By quantifying the standard time required for specific tasks, the report ensures that employee salaries accurately reflect their effort and the time invested in their work.
This report is efficient and minimizes staff time, allowing employees to effectively manage their schedules By reviewing the time report, they can clearly identify the time required to complete their remaining tasks.
PRACTICAL SITUATION OF ACCOUNTING FOR SALARY
AND PAYROLL RELATED COMPENSATIONS IN IC&PARTNERS VIETNAM CO., LTD
2.3.1 Classification of salary in ICP a Basic salary is the agreed wage between the employer and the employee specified in the labor contract, which is the basis for calculating salary and monthly salaries that employees will receive in the company. b There are also monthly allowances for employees that are clearly stated in the board of directors' regulations, as follows:
Each employee's allowance level is explicitly outlined in their labor contract, determined by their rank and job title The total salary comprises the basic salary along with any applicable allowances.
Total salary = Contract salary+ allowances d Actual salary is the amount of salary received by employees after deducting expenses such as insurance and personal income tax. e Reward
In the bonus and salary regulations of the Board of Directors, "Rewards" are considered a component of employee salary income, aimed at ensuring fairness between employee contributions and the benefits received from the company Bonuses serve as a wage adjustment for employees who exceed their salary and allowances throughout the year, with the bonus amount increasing in proportion to the level of contribution Conversely, if there is no significant difference in performance, no rewards will be granted.
2.3.2 The form of salary payment and salary calculation in ICP
Effective salary payment organization is crucial for any enterprise, as it plays a key role in motivating employees and fostering grassroots democracy By offering competitive salaries, companies can enhance employee enthusiasm and creativity, ultimately leading to improved labor productivity and increased material wealth for society.
Currently, the company applies the form of timework to pay salary:
According to the company's regulations, all members have weekend off on afternoon Saturday and Sunday.
For example: In December 2020, the first day of the month is Tuesday In accordance with the company's regulations:
The actual number of working days in December 2020 of all members in the company is 31 - 4 x 0.5 – 4 x 1 = 25 days
2.3.3 Documents/ Vouchers used in accounting for salary and payroll related compensation a) Report of attendance
Table 1.4: Excerpt from timesheet source of ICP in December 2020
Công ty TNHH IC&PARTNERS Việt Nam
Tầng 5 tòa N02, Goldseason 47 Nguyễn Tuân, P Thanh Xuân Trung, Q Thanh Xuân, TP Hà Nội, Việt Nam
1 Tạ Thị Thanh Thùy Tổng giám đốc x P x x x/2 x x KLx x x/2 x x KLx x x/2 x x x x x x/2 x x x x 23.0
2 Phan Thanh Hằng Phó Giám đốc x x x x x/2 x x x x x x/2 x x P x x x/2 x x x x KLx/2 x x x x 24.0
3 Vũ Thị Thu Hà Kế toán Trưởng x x x P x/2 x x x x x x/2 KLx x x x x/2 x x x x x x/2 x x x x 24.0
4 Phạm Thị Ninh Chi Kế toán viên P x x x x/2 x x x x x x/2 x x x x x x/2 x x x x x x/2 x x x x 25.0
5 Trần Vân Anh Kế toán viên x x x P x/2 x x x x KLx/2 x x x x x x/2 x x x x KLx/2 x x x x 23.0
6 Phạm Văn Hải Kế toán viên x x x x x/2 x x x x x x/2 x x x x x x/2 x x x P x x/2 x x x x 25.0
7 Trần Thị Trang Kế toán viên x x x x x/2 P x x x x x/2 x x x x x x/2 x x KLx x x/2 x x x x 24.0
8 Bùi Văn Giang Kế toán viên x x x x x/2 x x x x x x/2 x x P x x x/2 x x x x KLx/2 x x x x 24.0
9 Nguyễn Thị Quyên Kế toán viên x x x x x/2 x x x x x x/2 x x x x x x/2 x x x P x x/2 x x x x 25.0
10 Nancy Riva Chuyên gia tài chính P KLKLKLx/2 x x x x x x/2 x x x x x x/2 x x x x x x/2 x x x x 22.0
Hà Nội, ngày 31 tháng 12 năm 2020
TT Họ và tên Chức vụ/Bộ phận
Kế toán trưởng Người lập biểu
X/2 Working half day TS Maternity
KL Unpaid leave TN Accident
Scope of application: Applies to all employees at the company Every day, employees perform self-service by identifying fingerprints on a company's timekeeper.
At the end of each month, the administrator exports data from the timekeeping system to create the time table and transfer the timesheet along with relevant documents to the accounting department This process ensures accurate comparison and verification for calculating employee salaries and benefits The timesheet and associated documents are securely stored in the accounting office.
The timesheet serves as a crucial tool for monitoring employee attendance, including actual working days, absences, and social insurance leave This information is essential for effective labor management within each unit and provides the foundation for accurate salary calculations for employees.
Payroll is a table containing a list of employees used to show the amount that the company pays to employees; Company records about salaries, bonuses and deductions for employees.
Payroll is important, because it shows the amount of salary paid to employees
Timely and precise salary calculations and payments foster employee dedication and morale The accounting department plays a crucial role in this process by accurately determining employee entitlements, retained amounts, and deductions This encompasses salary payments, insurance deductions, and Personal Income Tax withholdings.
Table 1.6: Excerpt from Payroll sheet source of ICP in December 2020
5th floor, NO2 building, Goldseason 47 Nguyen Tuan, Thanh Xuan Trung Ward, Thanh Xuan District, Ha Noi, Viet Nam
1 Tạ Thị Thanh Thùy Tổng giám đốc 20,000,000 15,000,000 3,000,000 1,000,000 730,000 23 36,551,600 11,000,000 2 8,800,000 2,384,000 447,000 298,000 8,892,600 639,260 32,783,340 5,215,000 894,000 298,000 596,000 43,554,600
2 Phan Thanh Hằng Phó Giám đốc 10,000,000 5,000,000 1,000,000 500,000 730,000 24 16,540,800 11,000,000 1 4,400,000 1,200,000 225,000 150,000 - - 14,965,800 2,625,000 450,000 150,000 300,000 20,065,800
3 Vũ Thu Hà Kế toán Trưởng 10,000,000 5,000,000 1,000,000 500,000 730,000 24 16,540,800 11,000,000 2 8,800,000 1,200,000 225,000 150,000 - - 14,965,800 2,625,000 450,000 150,000 300,000 20,065,800
4 Phạm Thị Ninh Chi Kế toán viên 7,500,000 500,000 200,000 730,000 25 8,930,000 11,000,000 1 4,400,000 600,000 112,500 75,000 - - 8,142,500 1,312,500 225,000 75,000 150,000 10,692,500
5 Trần Vân Anh Kế toán viên 7,000,000 500,000 200,000 730,000 23 7,755,600 11,000,000 2 8,800,000 560,000 105,000 70,000 - - 7,020,600 1,225,000 210,000 70,000 140,000 9,400,600
6 Phạm Văn Hải Kế toán viên 7,000,000 500,000 200,000 730,000 25 8,430,000 11,000,000 2 8,800,000 560,000 105,000 70,000 - - 7,695,000 1,225,000 210,000 70,000 140,000 10,075,000
7 Trần Thị Trang Kế toán viên 7,000,000 500,000 200,000 730,000 24 8,092,800 11,000,000 1 4,400,000 560,000 105,000 70,000 - - 7,357,800 1,225,000 210,000 70,000 140,000 9,737,800
8 Bùi Văn Giang Kế toán viên 7,000,000 500,000 200,000 730,000 24 8,092,800 11,000,000 2 8,800,000 560,000 105,000 70,000 - - 7,357,800 1,225,000 210,000 70,000 140,000 9,737,800
9 Nguyễn Thị Quyên Kế toán viên 7,000,000 500,000 200,000 730,000 25 8,430,000 11,000,000 1 4,400,000 560,000 105,000 70,000 - - 7,695,000 1,225,000 210,000 70,000 140,000 10,075,000
10 Nancy Riva Chuyên gia tài chính 45,000,000 15,000,000 1,000,000 500,000 730,000 22 54,762,400 11,000,000 - - 447,000 41,085,400 7,021,350 47,294,050 5,215,000 894,000 - - 60,871,400
Prepared by Chief Accountant General Director
IC&PARTNERS VIET NAM CO.,LTD
MONTHLY PAYROLL From 01st to 31st December 2020
No Employee Name Dept Basic Salary for position Allowance
No Employee Name Dept Basic Salary for position Allowance
Taxable Income Total PIT Net Income
Taxable Income Total PIT Net Income
Specifically: The company's payroll is set on excel, including 23 columns as follows
Column 3: Dept: Job title of employees
Column 4: Basic salary: based on position and employee level, but with different basic salary Specifically, the Chief accountant has a basic salary of 10,000,000; Accountant has a basic salary of 7,500,000 or 7,000,000.
Column 5: Allowance for position: based on position and employee level, but with different allowance Specifically, General Director and Financial experts (foreigner) have a allowance of 15,000,000; Chief accountant is 5,000,000.
Column 6, 7, 8: Tax Exemption: Each employee in the company has three exemptions: transportation allowance, lunch allowance and telephone allowance with different amount
The specific allowance level for each employee is specified in Salary and bonus policy and the labor contract, based on the job rank position
Column 9: Actual working days: The data in this column is taken exactly from the time sheet corresponding to each employee.
Total income = [Basic salary ( column 3) + Allowance for position ( column 5) + Tax exemption (column 6,7,8)]
Column 11: Personal Deduction is the amount deducted from taxable income before calculating taxable income from salary.
The monthly deduction for individual employees is 11,000,000VND, respectively, each year is 132,000,000 VND
Dependents are persons whom taxpayers are responsible for raising.
The monthly deduction for each dependent is 4,400,000
Taxpayers must register their dependents with tax offices before any deductions can be applied This registration process is managed through the business, which is responsible for declaring employee dependents to the tax authorities.
Column 13: Dependent Deduction = No of Dependent ( Column 12) * 4,400,000 Column 14: Social Insurance
The highest salary for participating in social insurance payment from July 1 st 2019 is not more than 20 times the common minimum wage (20 x 1,490,000 29,800,000).
Social Insurance = If ((Column 5 + Column 6) >= 29,800,000; 29,800,000*8%,
For foreign experts, the rate of social insurance payment is 0%.
The highest salary for participating in health insurance payment from July 1 st 2019 is not more than 20 times the common minimum wage (20 x 1,490,000 29,800,000).
Health Insurance = If ((Column 4 + Column 5) >= 29,800,000; 29,800,000*1.5%,
For foreign experts, the rate of health insurance payment is 1.5%.
The highest salary for participating in unemployment insurance premiums does not exceed 20 times the regional minimum wage (ICP belongs to region I)
In Region I, the maximum salary for unemployment insurance premiums is capped at 20 times the regional minimum wage, which is set at 1,480,000 For accountants, who require professional training, an additional 7% is added, resulting in a calculated maximum salary of 31,672,000 (20 x 1,480,000 x 107%).
Unemployment Insurance = If ((Column 4 + Column 5) >= 31,672,000,
For foreign experts, it is not required to pay unemployment insurance.
Columns 17: Taxable Income does not include allowances, deductions and insurance
Taxable Income = Column 10 – SUM (Column 6: Column 8) – Column 11 –
Table 1.7: Personal income tax is calculated according to the progressive tax table:
Tax calculation formula payable (million dong)
Net Income = IF (Column 17>0, Column 10 – SUM (Column 14: Column 16) –
Column 18, Column 10, SUM (Column 14: Column 16)
Foreign experts working at companies that meet the conditions of individual resident should be calculated personal income tax according to the progressive tax table.
Example the following is salary calculation process of Mr Hai:
According to the labor contract above, his contract salary is 7,000,000 VND, he also receives other allowances in a month as below:
In December 2020, the first day of the month is Tuesday In accordance with the company's regulations:
The actual number of working days in December 2020 of all members in the company is 31 - 4 x 0.5 – 4 x 1 = 25 days
For Pham Van Hai, he went to work in 22 days.
Mr Hai's deductions from salary in 12/2020 as below:
Because the highest salary for participating in insurance payment is not more than 20 times the common minimum wage (20 x 1,490,000 = 29,800,000).
=> Net income = 8,430,000 – 560,000 – 105,000 – 70,000 = 7,695,000 VND c) Social insurance spreadsheet
Table 1.8: The rate of insurance for Domestic labor applied in ICP
Table 1.9: The rate of insurance for applied foreign experts in ICP
The amount of payroll related compensation paid by the Company shall be included in the production and business costs of the company in the month.
The amount of payroll related compensation paid monthly by employees will be calculated by the accountant to deduct from the salary the employee receive in that month.
Each month, by the last day, the company deducts social insurance, health insurance, and unemployment insurance contributions from employees' salaries These deductions are made according to the prescribed levels for each employee and are subsequently transferred to the designated account of the social insurance agency.
Table 1.10: Insurance sheet in December 2020:
Flowchart 1.3: Process of transferring salary document:
1 Every day, the employee will be confirmed time attendance.
2 Salary accountant will gather timesheets and related documents.
3 After obtaining the timesheet and related documents, salary accountant sets up the sheet to pay salaries, bonuses and payables.
4 Salary accountant transfer payroll sheet to the chief accountant for checking.
6 If the chief accountant agrees, send it to the Director If the chief accountant disagrees, send it back to the wage accountant to repeat the payroll table.
7 The director reviews and approves the payroll sheet, if the director agrees to sign the payroll.
8 Payroll will be returned to the chief accountant.
9 Salary accountant takes back the payroll sheets from the chief accountant and conducts salary distribution to the company's employees.
10 Employees after receiving a salary will sign a confirmation on the payroll sheet.
2.3.4 Accounts used in accounting for salary and payroll related
To account for salary accounting, the accountant in ICP uses the following accounts:
Acc 334 "Pay employees": Used to reflect payments with employees of the company on salaries, allowances, social insurance, bonuses and other items of their income.
Acc 338 “Other payable”: This account is used to account the deductions based on the salary of the employees that the company must pay into the state budget.
Acc 6422, titled "Enterprise Administrative Expenses," is utilized to record salary costs for managers and office staff, along with payroll-related compensation for the necessary units Additionally, accountants may reference related accounts, including Acc 111, 112, and 338, during the accounting process.
Example the following is salary calculation process of Mr Hai:
- Determining the amount of insurance deducted from salary of staff Debit acc 334: 525,000
- Determining the amount of insurance the company must pay
This amount will be paid for Mr Hai on the 3 th day of the following month according to the company's regulations with the following payment voucher:
Voucher 1.1: Detail monthly salary Đơn vị Phòng kế toán
VND VND VND VND VND VND VND VND VND VND
Người lập/Prepared by: Người nhận/Received by
2 Số ngày thực tế làm việc trong tháng/
1 Tổng số ngày công trong tháng/ Total working days:
Mã NV/ CODE : 027 Họ tên/ Name: Phạm Văn Hải
8 Tiền ăn trưa/ Lunch allowance:
7 Phụ cấp đi lại/ Transportation allowance:
6 Phụ cấp chức vụ / Responsibility salary:
5 Lương làm thêm ngày lễ/Salary for over time on public holidays:
4 Lương làm thêm/ Overtime Salary:
3 Lương cơ bản/ Basic salary:
14 Lương thực nhận trong tháng/ Net income:
13 Điều chỉnh nếu có/ Adjust (if any):
12 Thuế thu nhập nếu có/ PIT( if any):
11 Khấu trừ bảo hiểm/ Insurances:
10 Tổng thu nhập/ Gross income:
9 Phụ cấp điện thoại/ Telephone allowance:
BẢNG THANH TOÁN LƯƠNG CHI TIẾT HÀNG THÁNG
IC&PARTNER VIETNAM COMPANY LIMITEDAdd: 5th floor,N02 Building, Goldseason 47 Nguyen Tuan, Thanh Xuan Dist, Ha Noi City, VietnamPhone: (84)-243 2373 793
2.3.5 Insurance and personal income tax for foreigners
(1) Nancy Riva is a foreign financial expert
Based on Table 1.6: Excerpt from Payroll sheet source of ICP in December 2020
According to the labor contract above, her contract salary is 45,000,000 VND, she also receives other allowances in a month as below:
In December 2020, the first day of the month is Tuesday In accordance with the company's regulations:
The actual number of working days in December 2020 of all members in the company is 31 - 4 x 0.5 – 4 x 1 = 25 days
For Nancy, she went to work in 22 days.
Ms Nancy's deductions from salary in 12/2020 as below:
Deduction for PIT of employees themselves is 11,000,000 VND
Because the highest salary for participating in insurance payment is not more than 20 times the common minimum wage (20 x 1,490,000 = 29,800,000).
As a resident individual, the progressive tax rate schedule is utilized to determine the Personal Income Tax (PIT) With a taxable income of 41,085,400, which falls between 32,000,000 and 52,000,000, a tax rate of 25% is applicable.
The foreign individual grants the Company the authority to declare and finalize her personal income tax Since the Company reports VAT quarterly, individual income tax will also be declared on a quarterly basis This process includes the finalization of personal income tax.
Individuals receiving salary income can authorize organizations and enterprises to handle their tax finalization, as outlined in Article 16 of Circular 156/2013/TT-BTC and amended by Article 21 of Circular 92/2015/TT-BTC.
An individual earning solely from salaries and holding a labor contract of three months or longer with an income-paying organization is eligible for tax finalization, even if they have not worked the full year.