Kế toán doanh thu tại doanh nghiệp xây dựng

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<b>NATIONAL ECONOMICS UNIVERSITY SCHOOL OF ACCOUNTING AND AUDITING </b>

<b>BACHELOR THESIS Accounting </b>

<b>TOPIC: ACCOUNTING FOR REVENUES AT NHAN BINH JOINT STOCK COMPANY </b>

<b>TRAN THI TRANG NHUNG </b>

<b>HANOI, 2023</b>

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<b>NATIONAL ECONOMICS UNIVERSITY SCHOOL OF ACCOUNTING AND AUDITING </b>

<b>BACHELOR THESIS </b>

<b>TOPIC: ACCOUNTING FOR REVENUES AT NHAN BINH JOINT STOCK COMPANY </b>

<b>Student name : Tran Thi Trang Nhung Speciality : Accounting </b>

<b>Student ID : 11194093 </b>

<b>Supervisor : Assoc. Prof. Dr. Nguyen Phuong Hoa </b>

<b>HANOI, 2023 </b>

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<b>STATUTORY DECLARATION </b>

I herewith formally declare that I myself have written the submitted Bachelor’s Thesis independently. I did not use any outside support except for the quoted

<b>literature and other sources mentioned at the end of this paper. </b>

I clearly marked and separately listed all the time literature and all other sources which I employed producing this academic work, either literally or in content.

Hanoi, May 22^rd 2023

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<b>CHAPTER 1: CHARACTERISTICS OF REVENUES, ORGANIZING AND MANAGING REVENUES AT NHAN BINH JOINT STOCK COMPANY ... 3</b>

1.1. Characteristics of revenues at Nhan Binh Joint Stock Company... 3

1.1.1. Overview of business activities of the company ... 3

1.1.2. Features of the company’s revenues ... 8

1.2. Revenues management at Nhan Binh Joint Stock Company ... 12

<b>CHAPTER 2: PRACTICE OF ACCOUNTING FOR REVENUES AT NHAN BINH JOINT STOCK COMPANY ... 17</b>

2.1. Accounting for sales and service revenues at Nhan Binh Joint Stock Company ... 17

2.1.1. Accounting documents and procedures ... 17

2.1.2. Detailed accounting for sales and service revenue. ... 43

2.1.3. General Accounting for sales and service revenue at Nhan Binh Joint Stock Company ... 50

2.2. Accounting for financial revenue ... 58

2.2.1. Accounting documents and procedures ... 58

2.2.2. Detailed accounting for financial revenue ... 62

2.2.3. General Accounting for financial revenue at Nhan Binh Joint Stock Company ... 64

2.3. Accounting for other revenue ... 68

2.3.1. Accounting documents and procedures ... 68

2.3.2. Detailed accounting for other revenue ... 77

2.3.3. General Accounting for other revenue at Nhan Binh Joint Stock Company ... 82

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<b>CHAPTER 3: ASSESSMENTS AND RECOMMENDATIONS FOR </b>

<b>IMPROVING ACCOUNTING FOR REVENUES AT NHAN BINH JOINT </b>

<b>STOCK COMPANY ... 87</b>

3.1. Assessments of accounting for revenues at Nhan Binh Joint Stock Company ... 87

3.1.1. Strengths ... 87

3.1.2. Weaknesses and causes ... 90

3.2. Recommendations for improving of accounting for revenues at Nhan Binh Joint Stock Company ... 93

<b>CONCLUSION ... 96</b>

<b>REFERENCES ... 97</b>

<b>APPENDIX ... </b>

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<b>LIST OF ABBREVIATIONS </b>

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<b>LIST OF TABLES </b>

Table 1.1: Representative construction works of Nhan Binh JSC from 2018 to 2022 ... 4 Table 1.2: Revenue summary of Nhan Binh JSC in 2022 ... 10 Table 1.3: Construction revenue’s structure base on geographical location

(extracted)... 10 Table 1.4: Revenue from other activities ... 12 Table 2.1: Summarized calculation of valuation of completed work – Settlement payment record for the 50^th time of Hospital 700G (extracted) dated on

September 29^th, 2022 ... 31 Table 2.2: Summarized calculation of valuation of completed work – Settlement payment record for the 50^th time of Hospital 700G (extracted) dated on

September 29^th, 2022 ... 32

<b>LIST OF PICTURE </b>

Picture 1.1: Dong Thap General Hospital ... 7

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Figure 2.4: Appendix No. 46/PL-HDXD (extracted) ... 27

Figure 2.5: Acceptance certificate of Dong Thap General Hospital Project ... 29

Figure 2.6: VAT invoice for one part of Project of General Hospital ... 33

Figure 2.7: VAT invoice to record decrease contract value ... 36

Figure 2.8: Economic contract for selling steel (extracted) ... 37

Figure 2.9: Goods receipt note ... 39

Figure 2.10: Confirmation of public debt ... 40

Figure 2.11: VAT invoice for selling steels ... 42

Figure 2.12: Detailed accounting book of Account 5112 – Product V00172.00: Dong Thap General Hospital (extracted) ... 44

Figure 2.13: Detailed accounting book of Account 5112 (extracted) ... 45

Figure 2.14: Detailed accounting book of Account 521 (extracted) ... 46

Figure 2.15: Detailed accounting book of Account 5111 (extracted) ... 48

Figure 2.16: Detailed accounting book of Account 511 (extracted) ... 49

Figure 2.17: Bookkeeping process in the form of the voucher register ... 51

Figure 2.18: Summary table of vouchers of the same type (extracted) ... 53

Figure 2.19: Summary table of vouchers of the same type (extracted) ... 54

Figure 2.20: Voucher register book ... 55

Figure 2.21: General ledger of Account 511 (extracted) ... 56

Figure 2.22: General ledger of Account 521 (extracted) ... 57

Figure 2.23: Term deposit agreement ... 59

Figure 2.24: BIDV’s credit note... 61

Figure 2.25: Detailed accounting book of Account 5151 (extracted) ... 63

Figure 2.26: Summary table of voucher register of the same type (extracted) .... 65

Figure 2.27: Voucher register book ... 66

Figure 2.28: General ledger of Account 515 (extracted) ... 67

Figure 2.29: Decision on liquidation of fixed asset. ... 69

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Figure 2.30: Minute of BOD meeting on liquidation of fixed asset (extracted) .. 70

Figure 2.31: Contract of car disposing (extracted) ... 72

Figure 2.32: Minute of handover and acceptance (extracted) ... 74

Figure 2.33: VAT invoice for disposing car ... 75

Figure 2.34: Credit note for debt payment ... 76

Figure 2.35: Credit note related to recovering of bad debts ... 77

Figure 2.36: Detailed accounting book of Account 7112 ... 78

Figure 2.37: Detailed accounting book of Account 7111 ... 79

Figure 3.38: Detailed accounting book of Account 7113 ... 80

Figure 2.39: Detailed accounting book of Account 711 ... 81

Figure 2.40: Summary table of voucher registers of the same type – for gain (2) and (3) (extracted) ... 83

Figure 2.41: Summary table of voucher registers of the same type – for gain (1) (extracted)... 84

Figure 2.42: Voucher register book ... 85

Figure 2.43: General ledger of Account 711 ... 86

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<b>INTRODUCTION </b>

A developed country means that it has to meet the requirements of infrastructure. And to achieve that, there is no denying the construction industry. This is the field that helps to establish the necessary infrastructure for each unit, organization and society as a whole. Only when building technical development, other fields in the new economy have many favorable conditions for development. It can be said that the construction industry has always played a particularly important role. It is the determining factor of the size and technical level of the economy. Besides, it also holds the role of the most effective economic regulation tool.

Therefore, there are more and more companies operating in construction and installation field these days. However, the problem is quickly figured out, not many companies can exist sustainably for a long time and achieve considerable successes. To be able to survive and develop sustainably, businesses need to pay attention and focus on economic benefits and final profits. In the new mechanism of the economy, with the operation of many economic sectors, the independence and autonomy in enterprises is higher and higher, each enterprise must be dynamic and creative in business, must be responsible for its own business results, preserving capital and doing a profitable business. In order to achieve that, it is important for enterprises to follow and monitor the status and fluctuation of their revenue to make prompt business decisions.

It can be said that revenue is the first criteria that the company should focus on if they target to increase their profit. Therefore, in addition to general management measures, a reasonable organization of revenue accounting of business results is very necessary to help businesses have enough timely and accurate information to make their right business decision.

Recognizing the importance of organizing revenue accounting work applying the theories studied at the school, integrating with the actual observations from the work as an accounting intern at Nhan Binh Joint Stock Company, I chose the

<i>topic: Accounting For Revenues At Nhan Binh Joint Stock Company to study for </i>

my specialized thematic practice.

Studying this topic, this thesis aims to understand and describe accounting practice and procedures in relation to all kinds of revenue comprehensively, then

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initially assess their strengths and weaknesses, and finally suggest recommendation to solve the current problems and improve the company’s accounting works of revenue. The essay reflects the actual accounting practice for revenue, including processes and documents, of Nhan Binh JSC for the financial year of 2022.

<i>The bachelor thesis on the topic: Accounting For Revenues At Nhan Binh Joint Stock Company utilizes a variety of research methods to be studied and written. </i>

These research methods include reviewing the accounting documents of the entity such as economic contracts, financial policies, … , observation of the company’s documents rotation, interview of the accountants to know more about accounting treatments, nature of the transactions and current difficulties that the company is facing. Based on the data and information obtained from the above processes, analytics stages will be conducted to deeply understand the unit’s accounting information system, its circulation and procedures.

In addition to the introduction and conclusion, the thesis consists of 3 chapters:

<b>Chapter 1: Characteristics of revenues, organizing and managing revenues at </b>

Nhan Binh Joint Stock Company

<b>Chapter 2: Practice of accounting for revenues at Nhan Binh Joint Stock </b>

Company.

<b>Chapter 3: Assessments and recommendations for improving accounting for </b>

revenues at Nhan Binh Joint Stock Company.

I would like to thank the staffs of Nhan Binh Joint Stock Company, especially the finance and accounting departments of the company for creating conditions and helping me during my internship.

I sincerely thank Assoc. Prof. Dr. Nguyen Phuong Hoa who helped me to complete this internship thesis comprehensively.

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<b>CHAPTER 1: CHARACTERISTICS OF REVENUES, ORGANIZING AND MANAGING REVENUES AT </b>

<b>NHAN BINH JOINT STOCK COMPANY </b>

<b>1.1. Characteristics of revenues at Nhan Binh Joint Stock Company </b>

<i><b>1.1.1. Overview of business activities of the company </b></i>

Established in 2001, Nhan Binh Co., Ltd - now Nhan Binh Joint Stock Company has gradually developed and become one of the reputable construction and installation enterprises in the market. The company's staffs are construction engineers, bachelors of economics, finance and skilled workers with many years of experience who have worked at reputable construction companies and corporations such as: Bridge Company Nam Ha, Vinaconex Corporation, Song Da Construction Corporation, Song Hong Construction Joint Stock Company... The company’s main business lines focus on two areas: Building civil, industrial, transport, irrigation, cultural works and Investment in construction works in the form of Build – Transfer, Build – Operate – Transfer contract.

In term of infrastructure building, most of the construction projects are civil works, transportation and irrigation works, cultural works, technical infrastructure of urban areas, industrial parks and factories. The works and projects constructed by the Company are qualified, technical, artistic and highly appreciated by the Investor. A number of typical projects in the provinces of the South Red River Delta region have been voted for and awarded the Golden Product - Service Award.

The quality policy - "Quality is the goal and motivation for the Company to exist and develop sustainably" is considered as the guideline for the Company's production and business activities. Therefore, the company always determines to bring customers the works that are lasting with time, always satisfying customer needs with quality, progress with the most suitable price.

As an enterprise operating in the field of construction and installation, modern and specialized construction machinery and equipment is a factor that significantly affects the construction progress of works. In addition to constantly investing in technology, purchasing highly specialized construction equipment in the fields of transport, irrigation and civil, the company always accompanies with

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reputable partners to purchase high quality and suitable plants and equipment. That is the key criteria to ensure the value, quality and progress of the works.

Currently, Nhan Binh Joint Stock Company only operates in domestic market. Nhan Binh serves construction works throughout the provinces from North to South Vietnam:

 Red River Delta: Nam Dinh, Thai Binh - North: Hanoi City, Bac Giang, Bac Ninh, Quang Ninh

For the period from 2018 to 2022, the company has completed a variety of construction and installation projects and many other works are in progress and expected to be handed over in the year of 2023, 2024 and 2026. Some of the representative works of the company in the period of 2018-2022 are the

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from Thai Binh city through Tinh

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<i> Source: Nhan Binh JSC’s annual report to the shareholders </i>

As shown in the table above, most of the investor owners of the projects that Nhan Binh has signed contracts with are local management board of investment and construction of provinces, districts or communes in the North and South of Vietnam. This also means that most of construction projects and works that Nhan Binh has engagement role are invested by state budget, therefore, these projects are often inspected by state construction inspection team, state audit. Due to this fact, the quality of construction works’ outcome and the profession in construction fields are deeply concentrated and appreciated in Nhan Binh Joint Stock Company.

The following figure is a picture of some significant construction and installation projects that Nhan Binh JSC has handed over the owner investors and put into operation thereafter.

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<b>Picture 1.1: Dong Thap General Hospital </b>

<i>Source: Nhan Binh JSC’s website </i>

Besides the main business activity as construction and installation, the company has extended their business scope to investing in real estate, urban areas, entertainment parks, public work, exploitation and trading of mineral water, and the company also plans to provide advisory service and distributing products in the near future. The Duyen Hai Onsen Mineral Water Factory project has basically completed the site clearance work with a total area of 49,190.2 m² / 50,728.3 m². The company has completed the procedures waiting for approval to sign the land lease contract, which is expected to be completed in the first quarter of 2023. The company has completed the assessment of mineral water reserves and has been completing the environmental impact assessment dossier to issue a mining license. In addition, the company adjusted the master plan, adjusted the project name and project scale approved by the Provincial People's Committee, issued a decision to adjust the investment policy and approved the investor in

management has registered to protect the mineral water trademark with the name "Na Bi", a trade mark of the hot mineral resort service area. At the same time, the factory produces mineral water for internal consumption and as gifts to communicate and promote products to customers. The company also has some small investment like investment in stock or other real estate, however, the

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efficiency does not reach the company’s expectation because the real estate and stock markets have fluctuated strongly in recent times.

<i><b>1.1.2. Features of the company’s revenues </b></i>

<i>1.1.2.1. Revenue recognition </i>

In term of construction and installation activities as Nhan Binh JSC’s main business line, the company obtain engagements by participating in bidding activities whenever any owner investors, who are often local management board of investment and construction projects, implement bid opening to find their most suitable and potential bidders for their upcoming projects. Therefore, a construction or installation contract which has commercial substance exists after the company and the owner investor reach an agreement on all conditions, function, responsibilities of both parties. This event occurs only when the company wins the bid, the current capacity and offering contract price of the company matches criteria and demand that local owner investors have set when searching their bidders. Based on the types, terms, conditions of each contract and arrangement between bidders and the investor owner, the company applies separate methods of revenue recognition, which are sometimes stated clearly in the construction and installation contracts. In general, Nhan Binh recognizes revenue of construction engagements in 02 particular methods: based on the progress agreed upon by the two parties and based on the written confirmation of the work volume and the issued invoice. For these ways of recognizing construction sales, the company has complied strictly Vietnamese Accounting Standard 15 which gives and guides regulations on construction contracts. According to Article 22 of VAS 15:

“22. Revenue and expenses of a construction contract are recognized in the following two cases:

(a) Where the construction contract stipulates that the contractor is paid according to the planned schedule, when the outcome of the construction contract can be estimated reliably, the revenues and costs related to the contract are recognized in proportion to the completed work as determined by the contractor at the date of the financial statements, regardless of whether the invoice has been paid according to the planned schedule and how much is the amount stated on the invoice.

(b) Where the construction contract stipulates that the contractor is paid according to the value of the volume performed, when the results of the

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construction contract performance can be reliably determined and confirmed by the customer, related revenue and expenses are recognized in proportion to the completed work that is confirmed by the customer in the period reflected in the issued invoice.” (Ministry of Finance, 2002)

After categories of construction projects are completed, recognized related revenue based on the acceptance certificate confirmed and signed by both parties, some relevant state departments in charge like construction inspector, state audit implement review and inspection on whether the projects are processed according to conditions in contract, the volume and amount calculation of the projects. If there are any mistakes or violations in the way both parties calculate cost, expenditures of the projects, or the change in the actual value, the inspectors will figure out the wrong or different amount and request the company to make adjustment to the revenue recognized. That is how revenue deductions in relation to construction works are recognized and recorded in Nhan Binh’s sales records and other accounting books.

In terms of financial activities, the company has signed many agreements on fixed deposit which have different rates and receiving periods of interest. Based on particular rate and period of interest that are clearly stated on the agreement, the company will estimate and recognize financial revenue monthly, quarterly or annually.

For other activities that incur income or revenue, the company relies on the nature of each transaction to apply revenue recognition in the most suitable way. For instance, when Nhan Binh sells fixed assets or tools like cranes, the company will record revenue from this liquidation when the assets are handed over to the buyers, who will confirm in delivery notes and control of the assets are transferred to the buyers, and the supporting value added invoices are issued.

<i>1.1.2.2. Classification of revenue </i>

As mentioned above, the company focuses their resources on main business lines which are construction, installation activities and investment activities. However, only the traditional main business line - construction and installation activities incurred revenue during the year of 2022. Meanwhile, the investment activities did not generate revenue because the company has recently expanded their business scope to investing and they have been in the first period to establish their projects in this area. Besides revenue from traditional business

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activities, the company also generated revenue from their financial activities and incurred income from other sources like assets and supplies liquidation, penalty receiving from the suppliers or their partners, … In summary, the company had 3 types of revenue, based on source of revenue, which are revenue from construction activities, revenue from financial source and other income in the year of 2022. The detailed figures of the company’s sales and revenue from other sources are shown in the following tables.

<b>Table 1.2: Revenue summary of Nhan Binh JSC in 2022 </b>

<i>Unit: Amount (VND) – Percentage (%) </i>

<b>Amount (VND) ^{Percentage (per}</b>

<i>Source: Nhan Binh JSC’s audited financial statements </i>

From the figures shown in the above tables, it can be seen that the revenue from construction activities account for the very large proportion of total revenue that Nhan Binh JSC generated in 2022 and this situation was also the same in the year before (seen in the table 1.3 below). The main revenue of the company include the sales that incurred from completion of construction works that the company had completed, implemented quality inspection and handed over to the owner investors. It can be figured out from the table that the revenue from sources other than main activities does not materially affect the total revenue of the company, therefore, these beside activities will not have much inherent risks.

<b>Table 1.3: Construction revenue’s structure base on geographical location (extracted) </b>

<i>Unit: Revenue (VND) – Percentage (%) </i>

<b>(%) Revenue from Northern construction site 178,186,129,670 68% </b>

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<b>No. Construction name Revenue (VND) ^Percentage(%) </b>

<b>Revenue from Southern construction site 82,591,223,101 32% </b>

<i>Source: Nhan Binh’s sales – cost records of Quarter 4/2022 </i>

It can be figured out from the above table that during the financial year of 2022, the company has gained revenue from construction projects in the North and South of Vietnam. Nhan Binh earned more from North construction sites than South construction sites and the Northern works are often located in Hanoi, Thai Binh and Ninh Binh. Meanwhile, Southern construction works are often located in Dong Nai, Dong Thap and Hau Giang. Especially, the company has a representative office in Dong Thap, so that they can easily manage works around the South.

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While the financial revenue mainly came from the interest received on fixed deposit agreement, the revenue from other sources incurs in some particular activities during the year of 2022. They include the income from liquidating fixed assets like unused cars, selling materials and tools that are no longer in needs, receiving late payment interest from customers and other irregular income.

<b>Table 1.4: Revenue from other activities </b>

<i>Unit: VND </i>

<i>Source: The accounting department’s documents </i>

<b>1.2. Revenues management at Nhan Binh Joint Stock Company Process of branding, increasing brand awareness </b>

The marketing department takes the responsibility to market and promote the company’s services to the community, especially potential and key clients who are state agencies, investment and construction project management board of provinces all around Vietnam. In order to increase Nhan Binh JSC’s brand awareness, the marketing team implements stages of actions as the following:

- Collecting information about the basic investment plans of the traditional areas, fields and markets of the Company in each medium and short term period. Besides, the team also analyzes and evaluates each market by location, potential market, or new coming market.

- Preparing a dossier that includes the company’s background information, current capacity of human resources and equipment, experiences in construction fields, some significant works that the company has completed and awards and achievements reached. This dossier will be sent to the potential customers who are investment and construction project management boards in potential invested locations.

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- Building close business relationship with customers, partners, obtain feedback and opinion about the company’s products and service from those parties.

- Preparing periodic marketing and market development assessment reports, propose plans to expand and narrow the local market according to the company's goals.

<b>Construction project bidding </b>

The bidding department takes the main function in presiding over the implementation of the bidding work. They collect, and search information on bidding for projects/works and prepare a bidding plan to submit to the Board of Directors for approval. The team also controls, monitors and updates the company's capacity profile for marketing and bidding, which is used for particular project. Contracts negotiation is also implemented by the team for projects/works from the time the master plan is approved until the contract is signed with the investor.

This bidding process also demands support from other department, not only the bidding team.

- The construction management supports to survey the market before bidding team prepares bidding documents, check the suitability of the proposal with the construction drawings and the actual survey site on the volume, construction methods and bidding progress in order to make recommendations during the tendering process.

- The business department supports to search and study information about price of goods, components, supplies, services in relation to construction for a base to propose bid price.

- The marketing team supports to handle the project's procedures from the time of receiving the bid registration information to the time of winning the bid.

Besides, the bidding team is responsible to co-operating with other relevant departments to monitor, synthesize and archive contracts, contract appendices (if any), documents related to works from the time of bid registration, bidding, signing until the contract liquidation.

<b>Obtaining and signing engagement letter </b>

After winning the bid for the construction project, the bidding team receives engagement letter prepared by the investor party. The bidding team is responsible

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for co-operating with other directly relevant department to make recommendations on conditions of the contract received, suggest adjustments on the volume of work, unit price, contract performance schedule, contract price and other contents (if any) to suit the interests of both parties. These recommendations will be summarized to the general director who will discuss and negotiate with the investor party to reach the final agreement.

When both parties reach mutual agreement on all conditions, the General Director in charge will representatively sign the original contract, which has both parties’ signatures and confirmations. The original engagement letter needs contains all necessary conditions, terms, regulations and responsibilities that the investor and the bidder have given such as work quality, construction schedule, acceptance method, payment period and methods, penalties on contract violation…

<b>Construction monitoring, managing and acceptance procedures </b>

- During project implementation

After the engagement letter is signed, the construction management department and the general director in charge discuss and nominate a construction team to directly implement the project. The construction team appointed will work under the control and review of construction management department.

Construction management department takes responsibility for planning, progress, and measures for construction organization, labor safety, environmental sanitation, and fire prevention for works according to bidding contracts and construction contracts to submit to the Board of Directors for approval. The team also monitors the implementation of construction works to ensure the work is on the right schedule, quality and labor safety from preparation to handing over and putting into use and the end of construction warranty. Furthermore, the team controls the construction volume during the contract performance and compares those to the contract to ensure every work is on the planned agreement. The construction management department is in charge of handling unsafe incidents occurring during construction by analyzing, evaluating, determining causes and proposing solutions to these troubles. In addition, the department researches new materials and technologies applied in construction, thereby proposing solutions for technical improvement and application of new technologies to increase productivity, quality and reduce construction costs. One of the most important

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functions of this team is monitoring, inspecting and supervising the construction quality of works to ensure technical, quality and artistic works.

Meanwhile, the business department checks the conformity of actual input quality (materials, labor, machine) that the construction unit puts into the work according to the assigned unit price. The business team also builds a master file of traditional suppliers who meet quality process criteria, checks and monitors contract performance with suppliers.

- Project acceptance procedures include internal acceptance stage and external acceptance stage to ensure the outcome has been double checked and satisfied the mutual agreement before.

When any stages or categories of project have been completed by the construction unit team, the construction management team carries out review, inspection and reconciliation of actual outcome with the agreed plan to ensure that all the work necessary has been actually done. This step needs the appearance of management team business department and construction unit team.

Having completed internal stage, the construction management department and the leader of construction team implement acceptance procedures with the project’s owner party to confirm that the work has been satisfied the owner’s discussed requirements. Then the acceptance report will be prepared by the construction managing team and signed and confirmed by both parties’ representatives. Furthermore, the team takes the responsibility for the settlement of investment capital, explaining problems related to the volume of the work to the state management agency during later inspection.

<b>Sales and account receivables control </b>

The accounting department and business department are in charge in following and controlling sales, account receivables and analyzing the cash flow in and out related to the sales and cost of the construction project. Receiving acceptance minutes and settlement payment records signed, the accounting department issues value added tax invoice and put data into the accounting software to record revenue in relation to the categories of the project which have been done. About sales and relevant cost of all construction projects, the accounting team prepares a master file to follow and record all sales accepted and recognized and its related cost of goods sold. Input data and information is updated frequently, therefore, the accountants can see the fluctuation and change in the revenue that have been incurred. Based on this master

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file, the accountant can make periodic sale – cost report to submit to the board of

<b>management, analyze flows and identify potential financial problems. </b>

The same process is implemented to follow the status of the company’s account receivables. AR ageing reports are filed to follow short-term, medium-term and long-term receivables to analyze the cash flow and financial capacity of the company. The AR ageing file is also used by the accountant to remind payment from the customers, estimate potential bas debts and open bad debts provision for the prudent purpose.

<b>Ensuring standard process of all activities </b>

In order to ensure that the company’s activities and procedures are enforced correctly as mutual standards that the company has built, the ISO team, within the BOD support office, is established. The team takes charge of establishing quality managing system satisfying the ISO standards, including quality manual, quality policy, annual quality goals, system of processes, appropriate guidelines for the company's production and business activities. This system will be frequently applied, maintained and improved so that it can be realistic and put into actual use effectively.

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<b>CHAPTER 2: PRACTICE OF ACCOUNTING FOR REVENUES AT NHAN BINH JOINT STOCK </b>

Nhan Binh Joint Stock Company is a company that mainly provides a full package of construction project such as constructing civil works, traffic and irrigation works, cultural works and urban technical infrastructure, industrial parks, factories. Therefore, the service revenue of Nhan Binh JSC is considered as the entire value of economic benefits that the company has gained during the accounting period, mainly revenue from completing and handing over construction project’s planned items or categories. The revenue will be recorded in the accounting books as soon as the VAT e-invoice of that amount is issued.

Accounting documents are prepared and stored by the accounting department to record service revenue include:

 Bids price form (included in a bidding dossier)

The company’s accounting department has implemented document flow in the process of service revenue recognition as the following:

 Stage 1: Preparing and submitting bidding dossier

When receiving information of opening of bids for potential construction project, the bidding team prepares a bidding dossier with support of other relevant and responsible departments and submits it to the procuring agency. The team

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prepares all documents as required by the procuring agency, including Form of Bid, Joint venture agreement (if the company decides to take a financial stake with another enterprise to implement the project), Bid security, Nhan Binh JSC’s capacity profile (financial capacity, machine and equipment capacity, human resources capacity), supporting documents for proving eligible bidders (ERC, financial statement, confirmation of information registered on the national bidding network, certificate of eligibility for conditional business lines...) and the bids price form.

 Stage 2: Receiving the result of bidding process and signing contract At the end of the bids, the bidding team will receive a notification of award in paper if the company wins the bids. The notification will be filed into 02 copies, the bidding team keeps the original one and the other for the accounting department. After that, the bidding team and general director as main persons in charge, with other support from relevant departments discuss with the procuring agency and then come to a mutual agreement.

The procuring agency files engagement letter and sends to the company for seeking signature of the general director – legal representative person of the company. Both parties must ensure that the engagement letters are prepared in original copies with signatures and red seal of both parties’ representatives. Each party participating in the engagement will keep 02 copies of original signed contract as supporting documents for further actions.

Pursuant to the contract between with the procuring agency and other entities in a joint venture (if any), the company appoints a particular construction team to implement the contract.

 Stage 3: Inspection of outcome and filing acceptance certificate of completed work

After each category or item of construction project has been done or the project has come to the acceptance period which is mentioned clearly in the engagement letter, the construction management department implements acceptance test procedures with the procuring agency. Both parties carry out inspection of materials, systems of machine and equipment used, items performed within the category, construction stages… Receiving the acceptance of the procuring agency, an acceptance certificate is prepared by the construction quality management team and signatures, confirmation and red seal of both bidders and

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procuring agency are gained. Like the engagement letter, the certificate of acceptance is compiled in several copies, each party taking part in the acceptance test keeps 02 copies.

Based on the acceptance minute and the economic contract, the engineering department, with support off construction quality management, prepares a settlement payment record for the purpose of valuation of the completed volume of work. The settlement payment records present a table that determines the valuation of each items of the work done by applying the contract price that has been agreed and mentioned in the engagement letter. This kind of document will be filed into several copies and sought signatures of all relevant parties, then each party will receive 02 copies. 01 copy of the settlement payment records will be sent to the accounting department for the purpose of VAT invoice issuance and revenue recognition.

Pursuant to the settlement payment records signed by both relevant parties, the accountant reconciles data and figures of relevant supporting documents, clear differences and ensures that the figures reflected correctly. Thereafter, the general accountant prepares VAT e-invoice relevant to the category of work that has been accepted and sends it to the procuring agency. A VAT invoice must include all the following information: information of the seller, information of the buyer, tax code, company name, address, paying method, description of the project, quantity, unit price, VAT amount, total payment, signature and seal of the unit. The file of VAT e-invoice is also kept and stored by the accounting department.

<i><b>Example 1: Implementing construction work of Dong Thap General Hospital </b></i>

(also called Hospital 700G) with Dong Thap Provincial Health Department as the procuring agency

The company came to an agreement with Provincial Health Department of Dong Thap to provide a full construction package of Hospital 700G on March 28^th, 2018. During 2022, the company implemented acceptance test procedures and handed over the project of constructing Hospital 700G to put the hospital into actual use.

Supporting documents were rotated as the following process:

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Stage 1: The bidding team prepared a dossier of bidding documents and submitted it to the Provincial Health Department of Dong Thap. The bidding dossier included all required documents, one of them could be mentioned was the Bids price form.

<b>Figure 2.1: Part of Dong Thap General Hospital’s Bid Price Summary (extracted) </b>

<b>BID PRICE SUMMARY </b>

<b>Item no. Description of work </b>

10-floor tower item – Water supply and

10-floor tower item- Curtain system and ceiling rods

1.6

10-floor tower item- System of handrails and anti-collision bars

1.7 ^{10-floor tower item-}

Electric light system   ^{9,971,243,881}

1.8 ^{10-floor tower item-}

Refrigeration systems   ^{14,723,960,116}

<i>Source: Bid package’s bidding documents </i>

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Stage 2: Receiving notification of award and signing engagement letter

After considerable effort to prove the company’s ability to complete the project, the bidding team won the bids and received notification of award. The notification of award is stored by the bidding team, attached with the documents

Approval of contractor selection results, bidding package No. 29: Construction of main works, auxiliary items (except for medical waste treatment items), indoor technical systems (except for the system) medical

gas), Out-of-house technical infrastructure (except for drilled wells). Including equipment for installation works under the project of Dong Thap

Pursuant to Decree No. 63/2014/ND-CP dated June 26, 2014 of the Government regulating detailed to enforce some articles of Bidding Law on selecting bidders;

Reviewing Appraisal Report No. 02.18/BCTD-CPM dated March 22, 2018 of Vietnam Construction Consulting and Project Management Joint Stock Company on the appraisal of contractor selection results for package No. 29: Construction of main works, auxiliary items (except for medical waste treatment items), indoor technical systems (except for medical gas systems), outdoor technical infrastructure (except for bore well). Including equipment for installation works under the project: General Hospital.

<small>1 Form 1: Notification of awards, Appendix </small>

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Considering the proposal of the Head of the Department of Planning and

<b>Article 1: Approve the bidder selection result for bid package No. 29: </b>

Construction of main works, auxiliary items (except for medical waste treatment items), indoor technical systems (except for medical gas systems), outdoor technical infrastructure (except for bore well). Including equipment for installation works under the project: Dong Thap General

1. Bidder: Joint Venture Nhan Binh Joint Stock Company - Xuyen Viet

2. Bid price: VND 762,766,268,000 (in words: seven hundred and two billion, seven hundred and six million, two hundred and

<b>Article 3: Chief of Office, Head of Planning - Finance Department of </b>

Health Department, Director of Dong Thap Province Civil and Industrial Construction Investment Project Management Board, Joint Venture Nhan Binh Joint Stock Company - Joint Stock Company Xuyen Viet and relevant

<i>Source: Accounting department’s documents </i>

Having reached a mutual agreement between parties, the procuring agency filed engagement letter and sent it to the Joint Venture Nhan Binh Joint Stock Company - Xuyen Viet Joint Stock Company. The general director of Nhan Binh JSC, after receiving comments and suggestion for contract adjustments from other relevant department, discussed and negotiated with Xuyen Viet and Dong

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Thap Health Department and then reached a final agreement. The original engagement letter was prepared by the procuring agency and sought signature and red seal from both parties. The team prepared 10 original copies in Vietnamese of engagement letter which had been signed by all parties and sealed, the procuring agency received 06 copies (02 for project management consultancy agency and 02 for construction monitoring consultancy agency), the bidders kept 04 copies.

<b>Figure 2.3: Contract for construction and purchase of goods No. 06/HD-SYT (extracted) </b>

<b>Bid package No. 29: Construction of main works, auxiliary items (except for medical waste treatment items), indoor technical systems (except for the system) medical gas), Out-of-house technical infrastructure (except for </b>

<b>drilled wells). Including equipment for installation works </b>

Today, dated March 28, 2018, at Office of Dong Thap Provincial Health Department, We, including the following parties:

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- Trading name: Dong Thap Provincial Health Department

- Address: Vo Truong Toan Street, Ward I, Cao Lanh City, Dong Thap Province

2. Bidder: Joint Venture of Nhan Binh Joint Stock Company and Xuyen Viet

- Address: Floor 8, Song Da Complex, Tran Phu Street, Van Quan Ward, Ha

- Bank account: 4501 0002 569 xxx, at The Joint Stock Commercial Bank for

- Address: 228 Ton Duc Thang Street, Lien Chieu District, Da Nang City

- Bank account: 3051 1001 19xxx, at Military Commercial Joint Stock Bank

Two parties agree to sign a contract for Construction of main works, auxiliary items (except for medical waste treatment items), indoor technical systems (except for the system) medical gas), Outside technical infrastructure (except for drilled wells); including equipment for installation works under the project: Dong Thap General Hospital (bid package no.29), with the following

<b>Article 4: Performance guarantee, payment guarantee, advance payment </b>

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<b> Article 5: Content and volume of work </b>

Bidders implement Construction of main works, auxiliary items (except for medical waste treatment items), indoor technical systems (except for the system) medical gas), Outside technical infrastructure (except for drilled wells); including equipment for installation works under the project: Dong Thap General Hospital (bid package no.29) according to the construction design dossier approved by the competent authority, strictly according to the requirements of the bid invitation dossier of the procuring agency and the bid dossier of the contractor; including the modification approved by the principal;

- Handing over and receiving, managing the construction site, receiving and

- Constructing and installing the construction equipment in accordance with approved design documents, current construction regulations and standards and in accordance with the requirements of the bidding documents and bidding

a) Construction part, based on unit rate adjusted: VND 652,857,022,430

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<b> Article 12: Rights and obligations of project management advisory agency </b>

<b>Nhan Binh Joint Stock </b>

<i>Source: Accounting department’s documents </i>

During the time of constructing, appendices and annexes were filed and attached to the original contract if there were any changes to the conditions, after both

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parties had completed discussion and came to an agreement. The appendixes were prepared in 10 copies and attached with each engagement letter filed.

<b>Figure 2.4: Appendix No. 46/PL-HDXD (extracted) </b>

<b>Bid package No. 29: Construction of main works, auxiliary items (except for medical waste treatment items), indoor technical systems (except for </b>

<b>the system) medical gas), Outdoor technical infrastructure (except for drilled wells). Including equipment for installation works </b>

2. Bidder: Joint Venture of Nhan Binh Joint Stock Company and Xuyen Viet

From: The Joint Stock Commercial Bank for Investment and Development of

From: The Joint Stock Commercial Bank for Investment and Development of

<b>a/ Contract value (according to the Appendix no.45/PL-HDXD dated June 29, </b>

2022): 780,420,979,500 dong (seven hundred and eighty billion, four hundred

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and twenty million, nine hundred and seventy-nine thousand, five hundred dong). In there

<i>- Xuyen Viet Joint Stock Company: 4,035,706,000 dong (due to inspection, </i>

<b> d/ Contract value after supplement is (a + b +c): 778,174,055,000 dong </b>

<b>Article 3: Other terms of Contract No.06/HD-SYT dated March 28, 2018; </b>

<b>Article 4: This appendix will not be separated from the contract </b>

no.06/HD-SYT dated March 28, 2018; 01/PL-HDXD dated September 26, 2018; …;

This appendix is prepared in 10 copies, the procuring agency keeps 06 copies,

<b>Xuyen Viet Joint Stock Company </b>

<b>GENERAL </b>

<i>Source: The accounting department’s documents </i>

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Stage 4: When each category or item of the construction work was done and internally inspected, the construction management team implemented acceptance procedures externally with the representatives or authorized persons from Dong Thap Provincial Health Department. After gaining acceptance from parties, the acceptance certificate was prepared by the construction management team and sought signature, red seal and confirmations from all parties.

<b>Figure 2.5: Acceptance certificate of Dong Thap General Hospital Project²</b>

<b>Bid package No. 29: Construction of main works, auxiliary items (except for </b>

medical waste treatment items), indoor technical systems (except for the system) medical gas), Outdoor technical infrastructure (except for drilled

<b>c) Supervision consulting unit: General Construction Consulting Joint </b>

<b>e) Bidders: Joint Venture of Nhan Binh Joint Stock Company - Xuyen </b>

<small>2 Form 2: Acceptance certificate, Appendix </small>

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Mr Le Van Thuan Position: Deputy of Director

- Bidding documents and contract of construction no. 06/HD-SYT dated March 28, 2018 between Health Department of Dong Thap Province and Joint Venture of Nhan Binh Joint Stock Company and Xuyen Viet Joint Stock

- Accordance with the contract progress and contract extension time approved

d) About methods to ensure labour safety, fire prevention and fighting safety,

Approve the acceptance test to complete the construction and hand over and

<b>Representative of procuring agency, project management board, </b>

<b>consultancy agency, hospital, construction unit </b>

<i>Source: The accounting department’ documents </i>

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Stage 5: Based on the acceptance certificate, the engineering department, with support with the construction quality management team, filed settlement payment records of this completion of the work and sought signatures of relevant parties’ representatives such as procuring agency, construction team, project management board, monitoring and advisory agency. The settlement payment records presented the table that determined the valuation of the volume of work completed, which was prepared based on the form 03a/TT, prescribed in the Circular 08/2016/TT-BTC. This settlement payment record was sent to the Health Department of Dong Thap Province as the procuring agency to determine and confirm the amount of valuation of the work accepted by both parties and the amount that the procuring agency was liable to pay to the company. This document was prepared in 08 copies, 02 of which were kept by each party who signed. 01 of the original copy was sent to the accounting department of Nhan Binh JSC.

<b>Table 2.1: Summarized calculation of valuation of completed work – Settlement payment record for the 50^th time of Hospital 700G (extracted) </b>

<b>dated on September 29^th, 2022 ³</b>

<i>Unit price: VND </i>

2. The remaining advance value that has not yet been recovered by the end of the previous period

4. Accumulated value of completed work at the end of this period

6. Proposed disbursement value for this period

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