4/4/2022

Learning materials

Chapter 4 * Financial Accounting text book (Chapter 5).

* Law on Social insurance No.58/2014/QH13 dated 20/11/2014
* Decree No.152/2006/NĐ - CP dated 22/12/2006 “Detailed implementation of

Payroll accounting some articles in Social insurance law”

* Circular No.03/2007/TT- BLĐTBXH dated 30/01/2007 “Detailed implementation
of decree 152/2006
* Decree No.05/2015/NĐ-CP (article 3; article 21 ...)
* Employment law No.38/2013/QH13 dated 16/11/2013 effective from 01/01/2015
* Decree 28/2015/NĐ-CP QĐ Detailed implementation of unemployment insurance
in employment law
* Circular No.28/2015/TT-BLĐTBXH
* Law on Health insurance No.25/2008/QH12 dated 14/11/2008;

Accounting Faculty, Academy of Finance 1 Accounting Faculty, Academy of Finance 2

References
List of contents
• Law No.46/2014/QH13 dated 13/6/2014 amendment and supplementation some
articles in Social insurance Law effective from 01/01/2015;
• Decree 191/2013/NĐ-CP dated 21/11/2013 Detailed implementation on trade 4.1 Overview of payroll and payroll related
union financing
• Temporary regulation on collecting, using and managing trade union fee compensations
according to 2012 trade union law
• Circular 23/2015/TT-BLĐTBXH dated 23/6/2015, guidance on salary regulated
on Decree 05/2015/NĐ-CP: How to calculate overtime salary
• Decree No.959/QĐ-BHXH dated 09/09/2015 on collecting and managing Social 4.2 Accounting for payroll and payroll related
insurance, health insurance, unemployment insurance; social insurance book,
health insurance card compensations
• Circular 200/2014/TT – BTC dated 22/12/2014

Accounting Faculty, Academy of Finance 3 Accounting Faculty, Academy of Finance 4


4.1. Overview
Payroll
• Payroll pertains to both salaries and wages:
•A salary is a form of periodic payment from an
employer to an employee, which may be
specified in an employment contract
•Salaries are often expressed in terms of a
specified amount per month or per year
•Salaries are often paid for
administrative and sales personnel
Accounting Faculty, Academy of Finance
Time based salary systems
• Time based salary systems determine the salary
based on actual working time and the rate of pay.
Actual =
Time – working
based time (hours, *
Salary weeks,
months…)
Accounting Faculty, Academy of Finance
4/4/2022
4.1. Overview
4.1.1 Payroll
• Payroll pertains to both salaries and wages:
•A wage is a compensation, usually financial,
received by worker in exchange for their labor
•Wages are often based on a rate per hour or on
a piecework basis (such as per unit of product)
• Wages are often paid for sales assistant,
managerial, factory employees and manual labourers
5 Accounting Faculty, Academy of Finance 6
Time based salary systems
• Comments:
– Simple to determine  able to minimize overhead costs
– No direct link between employee performance and pay
rates
Rate of
pay • Suggested condition to apply:
(hourly, – Suitable to jobs performed by part time or temporary
weekly, employees or indirect labour
monthly...) – This type of system requires effective employee
oversight as there is no incentive to motivate
performance.
7 Accounting Faculty, Academy of Finance 8
 4/4/2022

Job based salary systems Job based salary systems

• Job based salary systems determine the salary • Comments:
based on job performance (unit of products
– There’s a clear link between the value of the job
finished) and the rate per job (rate per product
performed to the company and the level of pay
manufactured)
– Complicated to administer and expensive to
operate
Job –
Unit of Rate per • Suggested condition to apply:
based = *
products unit – Suitable to direct labors
Salary
– Such a system is most effective in the
circumstance where jobs are clearly defined.
Accounting Faculty, Academy of Finance 9 Accounting Faculty, Academy of Finance 10

4.1.2 Related compensations Social insurance

• Social insurance • Social insurance: provides employees with
• Health insurance benefits for pension, early retirement,
survivorship, sickness, maternity, occupational
• Unemployment insurance
accident and diseases.
• Trade union fee
• Contributions are based on salary stated in the
employment contract and contribution rate
– The contribution rates under current regulations are
17.5% by the employer and 8% by employees.

Accounting Faculty, Academy of Finance 11 Accounting Faculty, Academy of Finance 12


Health insurance
• Health insurance: provides employees with
health care services (such as inpatient and
outpatient services at all health care levels,
laboratory exams, x-ray etc)
• Contributions are based on salary stated in the
employment contract and contribution rate
– The contribution rates are 3% by the employer and
1.5% by employees
Accounting Faculty, Academy of Finance
Trade union fee
• Trade union fee is a source of fund for
activities of trade union organization in
enterprises.
• Contributions are based on entire salary and
contribution rate:
– The contribution rates are 2%, all by the employer
Accounting Faculty, Academy of Finance
4/4/2022
Unemployment insurance
• Unemployment insurance: provides
unemployment compensation to an employee
when s/he loses his/her job or terminates
his/her labour contract with the employer.
• Contributions are based on salary stated in the
employment contract and contribution rate:
– The contribution rates are 0% by the employer and
1% by employees
13 Accounting Faculty, Academy of Finance 14
2. 4.2 Accounting for payroll and payroll
related compensations
4.2.1 Documents used
4.2.2 Accounts used
4.2.3 Accounting for payroll and payroll
related compensations
15 Accounting Faculty, Academy of Finance 16

4.2 Accounting for payroll and payroll related
compensations
4.2.1 Source documents:
 Timesheets
 Timesheets for working overtime
 Salary payment sheet
 Bonus payment sheet
 Confirmation for work completion
 Overtime payment sheet
 Salary and social insurance allocation table
Accounting Faculty, Academy of Finance
4.2.2 Account used
* TK 338 – Other payables
Acc 338
•Social insurance payable to
employees
• The compensations paid to
related authorities
• Expensed trade union fee
•EB (if any): Overpaid
compensation
Accounting Faculty, Academy of Finance
4/4/2022
4.2.2 Accounts used TK 334 – Salary payable
TK 338 – other payable
* TK 334 – Salary payable
Acc 334
• Salary and other payment have
• Salary and payroll related
been made or paid in advance
compensations payable to 18
• Payment is deducted from
employees’ salary
employees
•EB (exceptional): Overpayment to •EB: Salary and other
employees payable to employees
Acc 334
3341 – Payable to employees
17
3348 – Payable to other workers
4.2.2 Account used
19
• 3382 – Trade union fee
• 3383 – Social insurance
Acc 338
• 3384 – Health insurance
• Social insurance, health
insurance, trade union fee • 3386 – Unemployment insurance
deducted from expenses or
employees’ salary
Other related accounts:
• Overpaid salary related
compensations Acc 335- Accrued expenses
Acc 622- Direct labor cost
•EB : Other payables
Acc 627- Manufacturing overhead cost
Acc 111,112, 138…
Accounting Faculty, Academy of Finance 20
 4/4/2022

4.2.3 Common transactions

4.2.3.1 Accounting for payroll Acc 622, 627, 641, 642 4.2.3.2 Accounting for payroll related
Acc 334
Acc 338 (2,3,4,6) compensation
(3) Payroll related compensation (1b) Calculate salary payables TK 338 (2,3,4,6) TK 622, 627, 641, 642
deducted from employees’ salay TK 334
(8) Unpaid salary of absence Acc 353(1),622,627,641,642 (1) Social From
employees insurance, expenses
(2) Bonus payables (2) Social insurance paid health TK 334
Acc 111,112,511(333) to employees insurance, From
(1a) 1st salary payment of the month Acc 338(3) trade union
(7) Salary payment employees’
(4a) Social insurance managed by fee, salary
the enterprise unemploymen
TK 141, 138 TK111,112 TK111, 112
t insuarnce
(5) Electricity/water expenses Acc 138(8) (3) The compensation (4) Overexpensed trade
deducted on employees’ salary payment to authorities union fee is compensated
(4b) If the social insurance managed
or employees
TK 333(5) by related authorities

(6b) PIT
payment on (6a) Personal income tax
behalf of deducted from employees’
Accounting Faculty, Academy of Finance
employees salary Accounting Faculty, Academy of Finance21
21 22
22

Examples: Company X produces product A, the Answers:

following information is available: 1/ Salary payables
(Unit: 1,000 VND) Dr. Acc622: 100.000
1/ Salary payable to employees Dr. Acc627 (1): 20.000
- Direct labor in manufacturing process: 100.000 Dr. Acc641 (1): 10.000
- Manufacture supervisors: 20.000 Dr. Acc642 (1): 70.000
- Sales personnel: 10.000 Cr. Acc334: 200.000
- Administrative personnel: 70.000
2/ Assume that the salary payable = salary for insurance
calculation. Rate of payroll related compensations is
corresponding with current regulations.

Requirements: Calculate and make journal entries

Accounting Faculty, Academy of Finance 23 Accounting Faculty, Academy of Finance 24

23
 4/4/2022

Items 23.5% deducted from 10,5% deducted from Total

expenses employees’ salary
Social 200.000 * 17,5% = 36.000 200.000* 8%= 16.000 52.000
insurance
Heath 200.000* 3% = 6.000 200.000*1,5% = 3.000 9.000
Chapter 4
insurance
Unemployme 200.000*1% = 2.000 200.000* 1% = 2.000 4.000
nt insurance
Trade union 200.000*2% = 4.000 - 4.000
fee Nợ TK 622: 24.000
Nợ
Total
Dr.
TK 627 (1): 48.000
4.800 21.000 69.000 The end
Dr.
Dr. Acc641 (1): 2.400
Dr. Acc642 (1): 16.800
Dr. Acc334: 21.000
Cr. Acc338: 69.000
25 Accounting Faculty, Academy of Finance 26
(3382: 4.000;Accounting
3383: 52.000;3386: 9.000; 3384:4.000)
Faculty, Academy of Finance 25