ACCOUNTING FOR PRODUCTION COST AT HANOI URBAN ARCHITECT CONSULTING JOINT STOCK COMPANY UAC

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ACKNOWLEDGMENT
I would like to acknowledge many people for their help and assistance with this
internship. However, it is difficult for me to thank all of those fabulous people who
have assisted all thing for this report. There are some very memorable people who
cannot go without mention.
I take this opportunity to express my profound gratitude and deep regards to my
guide, Master of Commerce Dang Thi Thuy Hang, for her exemplary guidance,
monitoring and constant encouragement throughout the course of this report. The
blessing, help and guidance given by her time to time shall carry me a long way in the
journey of life on which I am about to embark.
Furthermore, I would like to express my gratitude to the Center for Advanced
Educational Program (AEP) and my school, School of Accounting and Auditing , for
their patience in helping me complete this internship program.
My special thank goes to the respected accountant, Ms. Tran Ngoc Dung, in
UAC. The continuous guidance, important advices and great supports that she gave
truly help me prepare my report. Without her help this report might not have been a
comprehensive one.

Supervisor: M.Com. Dang Thi Thuy HangHa Tien Thanh – Class: Advanced Accounting K52


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TABLE OF CONTENTS

Supervisor: M.Com. Dang Thi Thuy HangHa Tien Thanh – Class: Advanced Accounting K52


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Abstract
As the growth of Vietnam’s economy, accounting’s development seems to be one
of the most essential fields of any companies which want to assure for their progress.
In the direction of flourish, maximizing the profits is considered issue so that the
investors must make profitable decision toward the companies. Furthermore, after a
period of economic crisis, creditors now think more about the efficient of cost
accounting system of all corporations as the most censorious elements in evaluating
the company. For illustrating this issue, thesis would analysis the main cost accounting
systems at Hanoi Urban Architect Consulting Joint Stock Company – UAC and
supports some recommendations for this company.
The thesis included three chapters following this instruction:
Because of the limitation of time and knowledge, my report cannot avoid mistake.
I look forward to receiving comments from the professors of the National Economics
University as well as the staffs from UAC firm in order to complete this report
successful.

Supervisor: M.Com. Dang Thi Thuy HangHa Tien Thanh – Class: Advanced Accounting K52


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Abbreviation
SI:

Social Insurance

HI:

Health Insurance

UI:

Unemployment Insurance

Supervisor: M.Com. Dang Thi Thuy HangHa Tien Thanh – Class: Advanced Accounting K52


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LIST OF FIGURES

Supervisor: M.Com. Dang Thi Thuy HangHa Tien Thanh – Class: Advanced Accounting K52


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LIST OF TABLES

Supervisor: M.Com. Dang Thi Thuy HangHa Tien Thanh – Class: Advanced Accounting K52


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Chapter 1. The characters of services, the
producing
organization
and
the
management of producing costs at Hanoi

Urban Architect Consulting Joint Stock
Company - UAC
1.1 Characters of services provided by UAC
* Introduction about the company:
UAC has been privatized from Hanoi Urban Architect Consulting Company
according decision no. 4133/QĐ-UB of the People's Committee of Hanoi on
15/06/2005.
Company name: Công ty cổ phần tư vấn kiến trúc đô thị Hà Nội
Trading name: Hanoi Urban Architect Consulting Joint Stock Company
Abbreviation: UAC
Headquarter:
- Address: No. 25, Bui Ngoc Duong Street, Bach Mai Ward, Hai Ba Trung
District, Ha Noi.
- Mobile: 84.4.38634.648
- Fax: 84.4.38.8632.882
- Website:
- Tax code: 0103008692 on 26 May, 2005 by the Department of Planning and
Investment of Hanoi (2 modified December 3, 2009)
- Authorized capital of VND 9.702 billion, included: invested capital of Urban
Infrastructure Development Investment Corporation (UDIC) of VND 4.948 billion,
equivalent 51 percent.

* Main services:
The main outputs are services that UAC provides for their investors and
customers. Thus, for clear view, the list would illustrate the basic consulting services:
•

Advising investors in Vietnam and other countries. Management consulting
construction projects: manage and establish organizations of construction

Supervisor: M.Com. Dang Thi Thuy HangHa Tien Thanh – Class: Advanced Accounting K52


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investment.
•

Designing total ground area, structure: for civil engineering, industries, urban
infrastructure, industrial zones.

•

Designing of bridge project and land road.

•

Planning and designing total ground area: for architecture design interior and
exterior for civil engineering and industries.

•

Designing interior and exterior architectures overall planning the construction
site: for the civil engineering, industrial and processing zones, hi-tech parks,
agriculture, and forestry.

•

Designing urban planning, rural and industrial zones.

•

Designing electricity systems: for construction, industrial, urban infrastructure,
export processing zones and industrial parks.

•

Designing for ground leveling, drainage systems, internal roads for the civil
construction, industrial, export processing zones and hi-tech parks.

•

Considersing about topographic, geological, ecological environment and
environmental impact assessment for construction projects. Socio-economic
surveys and traffic surveys.

•

Designsing engineering, design technology, technical design of construction,
estimate making the civil construction and industrial, urban and
ruralinfrastructure.

•

Examinating of investment projects, the design, the total estimate.

•

Investing in developing urban areas, industrial zones, eco-tourism parks,
amusement parks, real estate, rental housing, factory, warehouse, business
office services.

•

Researching, applying and implementing of scientific research and surveying
designing of the construction.

•

Consulting supervision of construction, installation of equipment in the field of
civil and industrial infrastructure.

•

Drawing up projects and consulting design about phone line system, TV and
camera.

•

Seting up bidding documentation and analysis and evaluation of bids.

•

Cadastral cartography, terrain to cater for: urban planning development,
Developmental areas, land management, administrative boundaries, land use
planning; And building surveyor: subsidence, tilt, deformation, linear
positioning, and cadastral documentation serves certificate right of Land Use.
Supervisor: M.Com. Dang Thi Thuy HangHa Tien Thanh – Class: Advanced Accounting K52


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•

Helding project management, inspection and certification of conformity of
quality construction.

•

Real estate valuation.

•

Real estate broker.

•

Managing and administrating of real estate trading floors.

The company’s operating avtivities are orcurred both inside and outside of
Vietnam.
The quality of UAC’s services has recognized by QUACERT, the National
Certification Body of Vietnam to support the state management over standardization.

Supervisor: M.Com. Dang Thi Thuy HangHa Tien Thanh – Class: Advanced Accounting K52


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Figure 1-1 ISO 9001:2008 Certified No. HT 1759/1.11.34 on 20/04/2011 by
QUACERT
The nature of services is quite simple, based on the requirements of the

customers. As illustrated by the list that shows main outputs of UAC, the company
will set up a short period for basic investors with consultant and review. Depending on
how long the plans and what they are required advices and consultant belong with
those projects or not, the company understands the customers’ demand as supports
advanced teams for extended period and professional knowledge.
Supervisor: M.Com. Dang Thi Thuy HangHa Tien Thanh – Class: Advanced Accounting K52


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The service can be long for 3 months, the minimum time for any basic require
because the company must have time for analysis carefully and review the result for
any unexpected situation. Hence, with the complex contract, supporting services for
many years is most common, from preparing project to accepting construction. The
period is enough for following all steps that construction need comment or evaluation,
so that the time base on the contract and characteristics of type services.
1.2 The producing process at UAC
The main function of the consulting company is to report pre-feasibility studies,
geological survey, and design construction. Thus, the company's technology is a
closed cycle from receiving project planning to design, organize bidding to
construction supervision.
UAC’s process includes 4 stages:
Process of Consultant Services

Making Investment Projects

Basic Design and Detail Design

Settlement Procedures for the Construction

General Construction Contractor

Figure 1-2 The UAC’s process

-

+ The stage of making investment projects:
Filing an application for an investment license.
Establishing the technical and economic feasibility study.
Editing application of allowing investment, charter joint venture or 100% foreign
capital companies, joint venture agreement.
Helping investors find construction sites for factories and deal with local venues, land
rents, compensation rates and other procedures.
Filing file of investments to MPI and on behalf of investors to explain to the
authorities for approval of the Government of Vietnam.

Supervisor: M.Com. Dang Thi Thuy HangHa Tien Thanh – Class: Advanced Accounting K52


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-

-

Promote investment application process to get a license.
+ The stage of basic design and detail design:
Topographic cartography construction area ratio 1/500; 1/2000 and other ratios.
Geological survey.
Detailed design based on the basic design of the investor.
Building (total ground, architecture, foundation, construction).
Power supply section for each device in the works outside.

Design lighting for inside and outside.
Supply systems for compressed air, heat, steam, ventilation and air conditioning.
Supplying water system for daily people’s living and firefighting.
Firing alarm systems automatic and semi-automatic.
Radio systems.
Phone systems.
Treatment systems for wastewater and surface water.
Design non-standard equipment. Designed productions (by AutoCAD program from
R14 to R2004), which UAC give to investor, included: 01 floppy disk and 09 prints.
+ The stage of settlement procedures for the construction:
Using land right.
Filing an application for design evaluation license.
Filing environment schemes and setting up permits agreements environment
(depending on the nature of production).
Building right.
+ The stage of general construction contractor:
On behalf of investors for project management.
Selecting contractor or construction bidding and procurement organizations.
Outlines the progress of construction, supervision and construction management of
contractors on site in accordance with design plans.
Advising investors to price builders.
Organizing acceptance of partial payment, settlement and transfer all work.
Monitoring the progress of quality comprehensive construction and installing
equipment, electricity, water and compressed air.
Permiting the import of equipment and materials for construction, the procedures for
receiving and shipping port to construction.
Making procedures permits the Lightning, firefighting, making the environmental
registry boiler equipment, pneumatic, crane.
Making procedures permits assessment of the quality to bring the plant into production
Supervisor: M.Com. Dang Thi Thuy HangHa Tien Thanh – Class: Advanced Accounting K52

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-

as stipulated by Vietnam government.
Civil construction.
Industrial construction.
Construction planning.
Infrastructure construction.
Building maps.
Geotechnical survey.
Supervision consultants.
Consultant bidding documentation and analysis of bids.
Project verification.
Construction and installation.
Conformity assessment of the quality of work.
1.3 Management of producing costs at UAC.
As specified in the Company’s financial regulations, all costs incurred in the
company based on financial regulation of Contracting and job search, Operation of the
Board of Directors and Board of Management, assigning responsibilities Regulation
Directorate, and Operation Regulations of the Supervisory Board.
Financial Accounting Department and Planning Department in early trading
year, based on the results of the previous business year to develop business plans to
produce next year. The business plan includes plans for revenue, cost of sales, cost of
business management, thereby determining the value of contracts signed and the
money value of that center to be achieved in each year.
The value shall be analyzed carefully by both provisions. Hence, the report,
from the two departments, will be reviewed by General Director. After that, General

Director considers and supports to the Board of Directors. At this step, the Board of
Directors establishes a meeting for creating a resolution on the business as plan as
short term and long term strategy.
This information above is translated to the map to illustrate the process of
managing cost services.

Supervisor: M.Com. Dang Thi Thuy HangHa Tien Thanh – Class: Advanced Accounting K52


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Board of Directors

General Director

Financial Accounting Department

Planning Department

Figure 1-3 The process of managing cost product at UAC
-

-

-

Every year, the company will be notified of cost accounting regulations
according to the cost (if any changes). Based on this, the manager has to gather
evidence base from completion at the rate of advance fee items according with
the regulations.
Department of Accounting and Finance is responsible for checking legality and

validity of the documents in advance that project manager gathers each month,
according to project details.
In the first quarter of the next financial year, the Supervisory Board shall be
responsible for examining the legality and validity of management cost of block
administration, tracking the revenue, the expenses and the establishment
financial statements of the company.
Along with the inspection and control of the Board of Control, the company
annual invites an independent auditing firm to audit the financial statements.
This audited report is the basis for the Shareholders' Meeting, to decide on the
distribution of profits last year as plan to pay dividends next year, and is the
basis for the Project Director to join materials tenders seeking counseling
services.

Supervisor: M.Com. Dang Thi Thuy HangHa Tien Thanh – Class: Advanced Accounting K52


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Chapter 2. The reality
accounting at UAC

of

production

cost

2.1.
Accounting for producing costs in the company
Characteristics of the production costs of the company:

Under the regulations of contracting and looking for work, the process of
recorded as the circle of procedures of cash in advance is controlled carefully. When
the money transferred to the account of UAC from the party A, as the investor,
Finance and Accounting Division has responsibilities for guiding Project Director
through the procedures. After receiving the advance payment, Project Director actively
allocates that money into different parts such labor cost, stationery, photocopy,
printing, depreciation of machinery and equipment. On 10th day of each month,
administrative staff of each center will gather and transfer the document costing to
Finance and Accounting Division. At there, the expenses of production will be
recorded. The costs of the works are detailed way for each expense item under at the
levels that are included in the Announcement about the cost accounting of the
expenses in UAC.
Following the project easily, every examples is considered under the number
contract 38/2008 between Hanoi Urban Architect Consulting Joint Stock Company
and Hanoi Civil Contraction Investment Joint Stock Company.
The Announcement of Advances is a document that Company announces the
Center about name of construction, total cash received and all information related.

Supervisor: M.Com. Dang Thi Thuy HangHa Tien Thanh – Class: Advanced Accounting K52


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Figure 2-4 Announcement of Advances under contract 08/038

Supervisor: M.Com. Dang Thi Thuy HangHa Tien Thanh – Class: Advanced Accounting K52


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URBAN INFRASTRUCTURE DEVELOPMENT INVESTMENT CORPORATION - UDIC

HANOI URBAN ARCHITECT CONSULTING JOINT STOCK - UAC
25 Bui Ngoc Duong-HBT-Hanoi

Tel: 8634648 Fax: 8632882 Email: : www.uac.com.vn

Announcement of Advances

Number: 100/13 /TB-TU

1. Based on:
Number business contract: 38/2008
Party A: Hanoi Civil Contraction Investment Joint Stock Company.
Content: Designed and released for construction drawings of the low-rise
building I5 Yên Hòa urban.
Form of money transfer: Bank Account Date: 30/11/2013
2. Receiver
Department: Center of plan and development, UAC.
Project Director: Phạm Bích Vân
3. Managing Cost Product:

Total cash by word: Three hundred fifty nine million two hundred ninety
thousand Vietnam dong.
4. Conditions of Advances:
Deadline: at least 05 days
Support documents to Finance and Accounting Division following regulations of UAC
30/11/2013
The Establishment

Director of Invest and Plan Division

General Director

Supervisor: M.Com. Dang Thi Thuy HangHa Tien Thanh – Class: Advanced Accounting K52


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(Signed)

(Signed)

(Signed)

Every month, based on summary document Project Director and other details,
the cost accountant records all things to the tracking table of pay back advances, and to
accounting software for each expense items and expense accounts.
To simplify the accounting process, the Finance and Accounting Division records
production costs according to two accounts:
Account No.622:

labor costs

Account No.6278: overall production costs are detailed by cost items such as
photocopies of printed materials, reception, telephone, equipment, and other expenses.
2.1.1. Accounting for direct labor costs

2.1.1.1. Contents
Direct labor costs are expenses relate to employees who directly in one project
including architects, project directors, and project managers.
2.1.1.2. Accounts
The related used account is Account No.622 – Direct Labor Cost, Account No.

33421 – Salaries Payable for Producing Block and Account No. 33422 – Advances
Salaries for Producing Block.
When Project director pays back all invoices that cover total amount of
advances for direct labor cost before the end of each quarter, the accountant records
those direct materials cost as:
141(1412)

622

Recording
Direct Labor cost

154

Closing entry
Direct labor cost

Figure 2- 5 The process of recording Directly labor cost ( Full document of paying
back advances of directly labor cost)

Supervisor: M.Com. Dang Thi Thuy HangHa Tien Thanh – Class: Advanced Accounting K52


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In the case that the Project Director supports one part of all invoices for
direct labor cost, the accountant designs an adjusting entry under account 33421 and
33422.
141(1412)

622

154

33421
Recording

Posting

Direct labor cost Direct labor cost

Closing entry
33422
Recording

Direct labor cost
Posting

Advanced Salaries Advanced Salaries
Figure 2- 6 The process of recording Directly labor cost( not enough document cover all cost of
using labor)

For example under contract 08/038, the accountant record:
Debit: 33421
Credit: 1412

195,642,000
195,642,000

Debit: 33422
Credit: 1412

8,500,000
8,500,000

Debit: 622
Credit: 33421
Credit: 33422

204,142,000
195,642,000
8,500,000

Supervisor: M.Com. Dang Thi Thuy HangHa Tien Thanh – Class: Advanced Accounting K52


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2.1.1.3.

Source of Documents
The first is Timesheet. It is a document for recording the number of days worked. It is designed and performed by
Project Director.

Supervisor: M.Com. Dang Thi Thuy HangHa Tien Thanh – Class: Advanced Accounting K52


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Supervisor: M.Com. Dang Thi Thuy HangHa Tien Thanh – Class: Advanced Accounting K52

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Figure 2-7 TIMESHEETS

Supervisor: M.Com. Dang Thi Thuy HangHa Tien Thanh – Class: Advanced Accounting K52


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URBAN INFRASTRUCTURE DEVELOPMENT INVESTMENT CORPORATION - UDIC
HANOI URBAN ARCHITECT CONSULTING JOINT STOCK - UAC
25 Bui Ngoc Duong-HBT-Hanoi

Tel: 8634648 Fax: 8632882 Email: : www.uac.com.vn

Form No: 07 – HTU.CC
TIMESHEETS
December 2013
Project Director:

PHAM BICH VAN

ON Date Summar
a
on
y
m mon
e
th

2 F F M
o o e
l ll al
l o b
o w et
w i w
i n e
n g e
g P n
r S
T o hi
i d ft
m u s
e c
Supervisor: M.Com. Dang Thi Thuy HangHa Tien Thanh – Class: Advanced Accounting K52


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……
5B
ùi
T
hị
Bí
ch
6B
ùi
T
hị

Y
ến
7B
ùi
V
ăn
H
ư
n
g
……

t
… …… …
S
2
1

S

2
2

S

2
2

… …… …
Recording Timesheets

Project Director

(Signed)

(Signed)

Note:
Vacation: F

Other Vacation: NB

Pregnant: TS

Labour duties: LĐ

Supervisor: M.Com. Dang Thi Thuy HangHa Tien Thanh – Class: Advanced Accounting K52


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Sick: Ô
Studying: H

Business: CT
Family Issue: CÔ

Day-off without salary: Ro
Unreasonable absence: R

Vacation regimen: CĐ

After that, the payroll sheet is calculated based on Timesheet. The payroll sheet is the sum total of all compensation that a
business must pay to its employees for a set period of time or on a given date.

Supervisor: M.Com. Dang Thi Thuy HangHa Tien Thanh – Class: Advanced Accounting K52