Materials accounting in nissei electric hanoi company

/04/11”; Invoice Date: must input (used for count payment) “8/05/25”; Amount: 100.200.000; Employee: Input employee code of Materials accountant; Currency: must default from Vendor Master; Spot rate: Must default SPOT. Then click Ctrl à screen 8: Screen 8 Payment due date: must default from Terms code; Acct: input 611102; Amount (Net): 100.200.000; Item Description: Input item Des in Vietnamese (Phi nhap khau 0803) Input item Des in English (Import fee). Then click Ctrl à screen 9: Screen 9 BPCS changes the amount in VND into USD automatically according to exchange rate of 11th Apr. On this screen, you can’t input any information. If information displayed wrongly, you must return to previous screen to re-input. But Journal No will go to next No: Ex: Voucher No will be PH 0000010 (not is PH 0000009 – its blank). Example 4: At the beginning of 2008, N.E.H signed a contract with Nippo Mechtronics Co.,Ltd (a domestic company) ordering materials Resin Molding (ABS) for Antenna production of the year 2008. A product technology design of ABS and other technical parameters are enclosed. This is the contract form of N.E.H and Nippo Co. The socialist republic of Vietnam Independent - Freedom - Happiness ---***--- Domestic Sales contract Contract No: N.E.H - HH/08 HANOI DATE: 2008/01/01 SELLER (party A)/ bên bán (bên A): Công ty TNHH Nippo. Address/ đ.c: Khu công nghiệp Nội Bài – Sóc Sơn – Hà Nội. Tel/ Điện thoại: 04-5820288 Fax: 04-5820289 Tax code/ Mã số thuế: 0500461746 Represented by/ người đại diện: Phùng Quang Thắng Position/ chức vụ: Giám đốc Acc no (VND): 43111.2.00.00.149 at BIDV – Soc Son branch - Ha Noi (số tài khoản: 43111.2.00.00.149 tại ngân hàng đầu tư và phát triển chi nhánh Sóc Sơn – Hà Nội) Acc name: Công ty TNHH Nippo Buyer (party B)/ bên mua (bên B): Nissei electric Hanoi co.,ltd Plot I-3, Thang Long Industrial Park, Dong Anh, Hanoi Tel: 84.04.955.0045 Fax: 84.04.955.0046 Tax code/ Mã số thuế: 0101877478 Represented by: SHOJI YAMAMOTO Position/ chức vụ: General Director The above parties here by agreed that seller shall sell and the Buyer shall buy the commodities with the following terms and conditions: (Hai bên cùng đồng ý tiến hành việc mua bán theo đúng các điều khoản quy định dưới đây): Item/ product (hàng hoá/ dịch vụ) Party A sells to Party B products according to invoice attached of each transaction. (Bên A bán cho bên B các loại hàng hoá theo hoá đơn đính kèm của mỗi lần giáo dịch). VAT: 0% (Thuế VAT 0%) DELIVERY (GIAO HÀNG) Delivery date shall be carried out as requested purchase order of the Party B. (Thời gian giáo hàng theo nhu cầu của bên B trong từng đợt). Quality (Chất lượng) 100% Brand new and standard packing. (Đóng mới 100% và được đóng gói theo tiêu chuẩn). Good quality is maintained delivery, when a defective is discovered the goods are returned. (Đảm bảo chất lượng tốt, nếu sau khi giáo hàng phát sinh các vấn đề về chất lượng thì hàng hoá sẽ được trả lại). PAYMENT TERMS (ĐIỀU KHOẢN THANH TOÁN) T/T remittance by every month 25th (thanh toán chuyển khoản vào 25 hàng tháng). If the amount of goods purchased is less than 3.000.000 VND by cash every Friday (nếu giá trị lô hàng được mua dưới 3.000.000 VND thì thanh toán bằng tiền mặt vào thứ 6 hàng tuần). GENERAL TERMS (ĐIỀU KHOẢN CHUNG) Any change and amendment to this contract will be writing and subject to mutual approval. This contract is effective from the date of signing and is made in two (02) copies in English. Each party shall return a copy for their use. This agreement shall be valid to December 31st 2008 (Bất cứ sự thay đổi nào trong hợp đòng này phải được thoả thuận bằng văn bản với sự đồng ý của cả 2 bên. Hợp đồng này có hiệu lực kể từ ngày ký và được chia làm 2 bản cho mỗi bên một bản. Hiệu lực của hợp đồng tính đến 31 tháng 12 năm 2008) For the buyer For the seller (Bên mua) (Bên bán) In March 2008, N.E.H sent a PO to Nippo Co.,Ltd for amount of Resin Molding (ABS). After 5 days, Nippo Co delivered materials to N.E.H with Tax Invoice (No: 0006589).  VAT invoice Format: 01 GTKT- 3LL (Copy 2th: issuing to client) Sign: AA/2007T Invoice No: 0006589 Invoice date: 27/3/2008 Seller: Nippo Co.,Ltd VAT code: 0500461746 Address: Lot 37 - Noi Bai Industrial Park AC No: 43111.2.00.00.149 Bank: BIDV – Soc Son branch Tel: 04. 5820288 Buyer: Nissei Electric Hanoi Co.Ltd VAT code: 0101877478 Address: Plot I-3, Thang Long Industrial Park, Dong Anh, Hanoi Payment terms: transfer Code Goods, services Unit Quantity Unit cost Amount A B C 1 2 3=1*2 3217223 Resin Molding PC 23.000 560 12.880.000 Value of goods or services 12.880.000 VAT rate: 0% VAT amount 0 Total amount 12.880.000 In word: Twelve million, eight hundred and eighty thousand dong. Purchaser (Signature and name) Supplier (Signature and name) Director of supplier (Signature and name) Delivery Address: Warehouse, Nissei Electric Hanoi, Lot I-3, Thang Long Industrial Park, Dong Anh, Hanoi After Purchase Dept inputs data into BPCS, the system deals with these data and processes these entries automatically: Dr Acc 611101 12.880.000 Cr Acc331102 12.880.000 Materials accounting at the end of month: N.E.H applies periodic materials system so at the end of month, they implement stocktaking for materials. N.E.H inventoried on 31st March. However, they planed for stocktaking in advance. This is the plan for stock-taking on March 2008. (see File Excel) These are documents used for crossed stocktaking and they are sent to Production Managing Dept: 1/3. Stocktaking report Quantity of remaining materials is right or wrong? There is no mistake Stocktaking is wrong Stocktaking is implemented coincidentally two times The quantity is wrong Number of random case: Source of mistake: (count wrong; some quantity of materials, had not checked, were left, etc…) Mistakes of the previous stocktaking: Mistake dues to stocktaking: Clean, tidy: (assess 5S implementation of area) Confirm the improvement of mistakes above: General assessment for this stocktaking: (tick off in one of these level) A. B. C. D. 2/3. Stocktaking assessment report Write specifically about mistakes, shortcomings and give solution for improvement in table below: General assessment: A. B. C. D. Condition of warehouse: Is there arrangement and reorganization? Are materials maintained in a clear and suitable place? Are places and spaces used suitably? Are unnecessary objects put? Condition of materials arrangement: Are similar materials arranged in the same place? Is materials arrangement suitable? Is there specific differentiation between materials inventoried and materials out of inventory? Are rejects and materials returned to suppliers put in correct place? Condition of materials preservation and management: Is “Available materials note” stuck on materials easy to understand? Are remaining materials arranged and container expressed suitably? Are materials dirty? Condition of stocktaking: Are all of materials, which are required for inventory, stuck “inventory note” on? Is the relation between “inventory notes” and materials easy to understand? In the time estimation, is stocktaking implemented fluently? Is “inventory note” written right? On the “inventory note”, stuck on materials, both person who recorded the note and counter sign or not? 3/3. Result of random stocktaking Important note for random stocktaking: Material has high value; Materials have not a regular import; To each responsible person, each maintaining area; random stocktaking must be implemented at least one material; Random stocktaking must be implemented at least 30 situations then 20 situations are recorded sufficiently into table below; Determination quantity of remaining materials has to base on counting available materials, not base on quantity of materials written on the note. Inventory Note No Materials code/ Name A Expressed quantity B Checked quantity A - B Difference Check after adjustment: check with inventory notes which were repaired after they had detected difference. If they detect mistakes at least 3 situations, they will inventory that area again (inventory scale will be discussed with responsible person). Production Managing Dept deals with the result of stocktaking, repairs it (if there are differences), inputs data into BPCS and transfers these documents to Accounting Dept. BPCS calculates the weight average price for each kind of materials used in March automatically. When receiving stock-taking result, materials accountant defines the amount of materials remaining in the warehouse and amount of materials used in March by Excel file according to this way: Amount of materials used = Amount of materials at the beginning + Amount of stored materials - Amount of materials at the ending Inventory balance in the end of Mar 2008 Inventory data Unit: USD Profit Center Type Amount Adjustment Final Total 9611 Materials 17.816 17.816 Works in process 41.184 41.184 Finished goods 53.519 53.519 9662 Materials 36.495 36.495 Works in process 26.685 26.685 Finished goods 54.348 54.348 … … … … … 9600 Materials 2.371.809 -3.539 2.368.270 … … … … … Total Materials 3.025.755 -27 3.025.782 Works in process 197.408 197.408 Finished goods 337.045 -2.514 334.531 Total Inventory 3.579.208 -21.487 3.557.721 From the Inventory balance at the ending of February 2008 and at the ending of March 2008, accountant can determines the amount of materials at the beginning and the ending of March. From internal reports, the total amount of materials in March as well as amount of materials imported for each workshop can be defined. According to these data, total amount of materials used in March is calculated by this formula: Amount of materials used = 3,136,768 + 2,871,201.39 - 3,025,782 = 2,982,187.39 Amount of materials used for each workshop such as Antenna workshop (code: 9662) in March can be defined: Dr Acc 621100 264,105 Cr Acc 611100 264,105 The entry of transferring the amount of materials at the ending of March: Dr Acc 152100 3,025,782 Cr Acc 611100 3,025,782 Some special transactions: BPCS records purchasing materials and selling goods automatically. There is usually difference between BPCS’ information and reality. To restrict this difference, N.E.H sets up all cases (if any) and solution for each case. Only raw material is recorded automatically on BPCS. The differences can be on quantity or unit price. Is its quantity, it is confirmed and repaired by Purchase Dept and Production Managing Dept. Accounting Dept confirms and repairs with unit price difference only. Accountant compares invoice with BPCS after Purchase Dept’s inputting data into BPCS. The difference between invoice and BPCS usually happens in case the materials were price installed in BPCS in advance. But this occur rarely. This is the diagram describing above processing transaction: Yes Download ADS.csv Acc or Ex Invoice Inquiry Unit price Invoice is right End Make debit note Debit Note ADS.csv AP GJ, GL Voucher Reconfirms End Defective Materials No Flowchart 2.9: Some situations creating debit note This is an example for a situation creating debit note for defective materials. Example 5: On 19th of March 200;: N.E.H received materials from Nissei Electric Hong Kong according to Invoice No: NIHK 38876. After testing materials, stockman found that some materials defected and announced to Production Managing Dept for confirming and PMD decided that materials could not be used for production. So Purchase Dept created a debit note (No DNEH08-026) for these returned materials. Amount of these materials is: 644 USD. Dr Acc 331302 644 Cr Acc 611102 644 Example 6: 15th March, Accountant confirmed invoice (No HC - 1196A) and detected a difference on unit price of Antenna cover; BPCS unit price was: 3.32 USD but invoice unit price was 3.34 USD. After having consideration, they found that the invoice price is wrong, accountant informed Purchase Dept. Purchase Dept created a Debit note (No DNEH08-025) and sent it to Nissei Japan. (in case: invoice was right, they must install correct unit price in BPCS). Basing on this debit note, accountant input data into BPCS follow the entry: Dr Acc 331301 309 Cr Acc 611102 309 Debit notes are showed in next page. (see File Excel) Materials accounting books: Detail materials accounting books: As the thesis presented above, BPCS creates accounting books automatically. To support for management, BPCS can create many kinds of accounting books, managers can see them at anytime to make decision timely. Detailed materials accounting books that BPCS creates are: General Journal; ADS.csv (this book details on each type of materials bought follow each invoice); Buy book (this book details on each invoice); Supplier book (this book shows amount of materials bought in month detail for each Supplier); etc… Synthetic materials accounting books: BPCS creates synthetic accounting books: General Ledger At the end of month, materials accountant draws AP (accounting payable) report and send it to Accountant of bank deposit and General accountant; Buy report and send it to General accountant. Financial statements: At the end of month, N.E.H draws financial statements: - Balance sheet Format B01-DN - Statement of income Format B02-DN - Statement of cash flows Format B03-DN - Explanatory notes accompanying the financial statements Format B09-DN The financial statements must be prepared at the end of each month, quarter and year (31/12). In N.E.H, the preparing of the statement complies with the decision No 15 of Ministry of Finance in March 20th 2006. N.E.H reports these statements to Nissei Electric Japan. Accountants base on detailed books and synthetic books in BPCS to create financial statements. These are the displays to extract books from BPCS: To see detailed materials accounting books, enter 801; General Journal, enter 803 to Option Number To see synthetic books: General Ledger, enter 804 to Option Number. Then click Ctrl à next screen. On this screen, you can see General Ledger of Account 611102 in March 2008. General Journal, ADS.csv; General Ledgers and AP report, Buy report are presented below. (see File Excel) CHAPTER 3 SUGGESTIONS TO IMPROVE MATERIALS ACCOUNTING IN NISSEI ELECTRIC HANOI COMPANY AND LESSONS FOR VIETNAMESE COMPANIES Suggestions to improve materials accounting in N.E.H: Opinions of materials accounting in N.E.H: Management system: At the first time visiting N.E.H, I saw this is a regular and serious prompt as well as a very out-going working environment. They have their own enterprise culture and they always remind it to all laborers in the company especially to their new employees. Working environment is professional with ISO 9001 & 14001 system. Be in the manufacturing enterprise, the communication between sections is very important. Every morning at 8a.m, all staff of departments have to listen to announcements from the GD and Managers. The GD mentions some problems related to manufacturing, revenue of an item of goods or hygiene in a section; brings out some experiences that he has been get from another company; he also congratulates for a new order for company, etc. DGD introduces visitors, engineers or trainers from other companies to all staves in N.E.H. This is also a time for a section to communicate with other sections in the company and reports news to Board of Managers. In my opinion, this action is really necessary. They just need from 5 to 10 minutes to communicate, warn as well as encourage their staves. One of the most necessary activities in N.E.H is “5S activity” in Vietnamese, they are: sạch sẽ, sẵn sàng, sáng suốt, san sẻ, sâu sát. 5S can be considered a base for production and it is indispensable to any improvement in a factory. It is not only good for keeping the working place clean, but also helps to reduce a loss by spoilage and defect. N.E.H usually controls 5S activity in sections and organizes “The 5S competition” between sections in company twice a year. Therefore, all of departments and staves try to implement these well. With N.E.H, competition between enterprises means striving for superior employees. They try to create a working environment where the employees’ individuality is respected. They offer a safe and healthy working environment and chances of learning by training both in and outside of company as well as training in Japan. Therefore, engineers and workers can update new technology for production. They also provide sufficient public welfare and the prompt salary because they would like their employees to stay long with them and they prepare the above-mentioned environment for that purpose. Accounting department has six accountants with different tasks which is correlative with accounting works. All transactions are input into system timely everyday and accountants consider data to detect mistakes and compare with involved departments; so accounting works are not accumulated into the end of month, ensure suitability between system and reality. With a good internal control system, quantity and value of materials are managed strictly and always compared between departments through BPCS software. Materials Management: Materials are encoded and managed uniformly in whole of Nissei group. Materials play an important role in products; therefore, N.E.H attaches much important to materials management. Materials are managed by many sections such as: accounting Dept, Product Management Dept, warehouse, Purchase Dept… Each section has different role in managing materials and all staves must obey correctly these rule. Every transaction involved materials is always implemented in accordance with process. This ensures logicality and suitability between system and reality; in addition, this supplies information timely to managers. However, classification of materials in N.E.H in three types: raw materials (152100), materials (no item) (153301) and sub-materials (153302) to manage is not suitable for Vietnamese Accounting Standard 02 (VAS 02). According to VAS 02: “Sub-materials are materials supporting for production process, combining with raw materials to increase quality and design of product, used to ensure that equipments run well or supporting for technical and management demand”, therefore sub-materials and materials (no item) must be managed and accounted like raw materials. BPCS software: Accounting works in N.E.H are very high every day, but they have only six accountants in accounting room. Accounting works can be fluent and efficient due to the model management system of N.E.H with BPCS software. BPCS is used to control the operations of company and is in the category of ERP (Enterprise Resource Planning) software. BPCS also includes MRP (Materials Requirement Planning) to manufacturing operations, provided high standards of data validity such as engineering specifications and inventory accuracy. ERP systems attempt to integrate several data sources and processes of an organization into a unified system. A typical ERP system will use multiple components of computer software and hardware to achieve the integration. A key ingredient of most ERP systems is the use of a unified database to store data for the various system modules. The two key components of an ERP system are a common database and a modular software design. A common database is the system that allows every department of a company to store and retrieve information in real-time. Using a common database allows information to be more reliable, accessible, and easily shared. Furthermore, a modular software design is a variety of programs that can be added on an individual basis to improve the efficiency of the business. This improves business by adding functionality, mixing and matching programs from different vendors and allowing the company to choose which modules to implement. These modular software designs link into the common database, so that all of the information between the departments is accessible and real-time. After researching about this system, I found out some advantages of ERP and MRP management [8],[9],[10]: ERP advantages for management functions: ERP management system provides a technology platform in which an organization can integrate and coordinate their main internal business processes. They use this to fight against the problem of the organizational inefficiency brought on by the use of different systems in every department to store information. If a large organization uses many software systems at the same time depending on the activities, most of these systems have the objective of storing and providing information about several processes that do not communicate between each other, managers could spend a lot of time collecting the information necessary to make decisions for this reason. Because when the information is not integrated, they have to check it department by department and system by system. This fragmentation of data into several separated systems can have a negative impact on the organization’s efficiency level and in commercial performance. ERP is the best alternative for solving this problem because it gets to coordinate every important system of the enterprise into a single database. It designs and automates many business processes with the sole objective of integrating the information of the whole company, avoiding complex and expensive bonds between internal systems. Frequent Mistakes with Administration Software The most frequent mistake made in small organizations is that every department has its own needs and they ask technical department to provide software capable of matching them. Sometimes this is provided from the outside through vendors and it might not even exist. If it does not exist, the organization will probably ask employees to create it. This is why it is very difficult to have fluent communication between the different systems inside an organization, even if it might seem very small. Administrative Functions of ERP This module includes several applications for administration, treasury and financial activities. The data can be made for different currencies as well. You will be able to generate reports and export them to Excel, PDF or text documents. The general accounting data can be distributed through a flexible accounts plan, which makes reporting and preparing information easier. This module also gives you the opportunity of designing different quotes and defining the organization’s assets. It contemplates different criteria for depreciation and it records data regarding purchases, sales, etc. It also includes applications for collections, payments and taxes. You can find several key processes in ERP. One of them is the fully integrated funds management and controlling that supports convenient administration functions, as well as integrated functions for planning, monitoring and controlling resources, costs and personnel. It has core application functions with access to a common database. Another one is the high performance payroll accounting function that determines the wages, salaries and pensions of workers. This solution also covers payroll lists and supplementary benefits such as seniority, sick pay, maternity benefits, vacation allowances and bonuses. Planning and management of personnel budgets is also easier by linking discrete processes for instance planning of personnel budgets, funds approval and management and continuous budget control into integrated process chains. It provides visibility for managers into allocate funds and expenditures, notifying them of the need to take action. ERP and Administration Needs Safely and securely, with proven integration ERP provides a full complement of tools designed to meet the organizations administration needs for the time being. It offers complete solutions for strategic advantage by streamlining all of your strategic activities, allowing you to simulate and analyze everything from organizational structures to compensation packages to find the most effective use of your talent and resources. The solution also streamlines payroll activities, supports regulatory and labor requirements and creates effective management strategies for the entire organization. ERP provides powerful analytic and new intelligence. Workplace performance scorecards and management by objective methods can help managers to keep the organization synchronized with strategic goals, employee expectations and competitive offers. Analytical applications such as cost simulation, forecasting and reporting support more effective decision making, and numerous reporting functions enable the compilation of statistics on employee groups and office-specific employees or requirements. Integrated internet and intranet functionality allows organizations to deliver the power of information, enabling employees to actively manage their work lives. Self- service functions allow the staff to track their own data such as vacations, time of work schedules or to execute simple tasks, reducing in this way the volume of routine administrative tasks. ERP is the integrated solution that can provide the power of strategic analysis, workforce empowerment and employee satisfaction. ERP dramatically reduces the time it takes to carry out everyday tasks, and at the same time it gives your staff more time to add greater value to your business by making better-informed decisions. As administration is not easy, ERP can help you by giving you the chance of using a large number of batch operations, service options and administration functions, correcting or checking records and informing you of mistakes or incorrect data. Advantages of MRP system: With MRP (the origin of initial ERP) system, N.E.H can control the types and quantities of materials they purchase, plan which products are to be produced and in what quantities and ensure that they are able to meet current and future customer demand, all the lowest possible cost. Making a bad decision in any of these areas will make the company lose money: If a company purchases insufficient quantities of an item used in manufacturing, or the wrong item, they may be unable to meet contracts to supply products by the agreed date. If a company purchase excessive quantities of an item, money is being wasted - the excess quantity ties up cash while it remains as stock and may never even be used at all. However, some purchased items will have a minimum quantity that be met, therefore, purchasing excess is necessary. Beginning production of an order at the wrong time can cause customer deadlines to be missed. But MRP is a tool to deal with these problems. It provides answers for several questions: What items are required? How many are required? When are they required? The data that must be considered include: The items being created: This is sometimes called Independent Demand or Level "0" on BOM (Bill of materials). How much is required at a time. When the quantities are required to meet demand. Shelf life of stored materials. Inventory status records: Records of net materials available for use already in stock and materials on order from suppliers. Bills of materials: Details of the materials, components and sub-assemblies required to make each product. Planning Data: This includes all the restraints and directions to produce the end items. This includes such items as: Routings, Labor and Machine Standards, Quality and Testing Standards, Scrap Percentages, and other inputs. Outputs There are two outputs and a variety of messages/reports: Output 1 is the "Recommended Production Schedule" which lays out a detailed schedule of the required minimum start and completion dates, with quantities, for each step of the Routing and Bill of Material required. Output 2 is the "Recommended Purchasing Schedule". This lays out both the dates that the purchased items should be received into the facility and the dates that the Purchase orders or Blanket Order Release should occur to match the production schedules. Messages and Reports: Purchase orders: an order to a supplier to provide materials. Reschedule notices: recommend canceling, increasing, delaying or speeding up existing orders. An MRP system is intended to simultaneously meet three objectives: Ensure materials and products are available for production and delivery to customers. Maintain the lowest possible level of inventory. Plan manufacturing activities, delivery schedules and purchasing activities. Automatic management system reduces a lot of workloads of company in general and accounting in detail. It makes production in N.E.H in general and materials accounting in detail more efficiently. However, BPCS or ERP system also has fixed disadvantages. Cost for an ERP system is not small and Nissei spent a lot of time to research, contribute this software for using suitably; more than that deployment for applying fluently this system in Nissei is also complex and takes a lot of time. Be a foreign company but almost staves in N.E.H are Vietnamese, before working, all staves must be trained for using this software as well as enterprise culture. This working environment has many differences from Vietnamese companies; therefore Vietnamese staves must try by themselves to familiar with it. They must work in accordance with process; sometimes, it makes them bored and they want to leave for another job. At that time, N.E.H must recruit new employee for empty position and lost more cost to train new employee again. Working in accordance with process means all information and transactions must be input timely and correctly. Accountants in N.E.H rarely forget to do it but these situations still exist. They can detect these mistakes at the end of month only and input them. This can affect to decision of managers and makes differences between system and reality. N.E.H is an import-export company in Thang Long Industrial Park in Vietnam, therefore, all documents and reports (except internal reports) must be in Vietnamese or bilingual. In fact, many documents in N.E.H are in bilingual, but some documents are only in English such as: reports (AP, Buy report, Inventory Balance at the beginning/ending of month, etc), documents (Invoice, Packing List, etc). Suggestion to improve materials accounting in N.E.H: By this management system, BPCS software and hard working of materials accountant as well as other staves in N.E.H, materials in N.E.H are managed and used quite efficiently. The thesis would like to offer some suggestions to improve materials accounting in N.E.H in detail and N.E.H in general: 3.1.2.1. Classification and management of materials: Materials (no item) are materials used for production indirectly including: razor blade, screw, etc; sub-materials now include chemical, pencil, silicon rubber, muffler, gloves for workers, etc. They are being managed as tools and spare parts. Materials (no item) need to be encoded and input into system to manage. Thanks to this way, N.E.H can control amount of each material stored and used. N.E.H should reconsider and choose things that transfer gradually their value in products but do not have enough standards as tangible fixed assets to manage them as tools and spare parts such as: gloves for workers, muffler… Materials (no item) and sub-materials after being encoded and reclassification can be put into one account: 152200 (sub-materials) and will be managed as raw materials. 3.1.2.2. Documents and reports: As the thesis presented above, all documents and reports in N.E.H must be in Vietnamese or bilingual to obey the law. This also reduces works of accountant in auditing process. 3.1.2.3. Other general solution for N.E.H: N.E.H is a manufacturing enterprise with a large scale; therefore to manage efficiently, using the ERP system is necessary. With position in Hanoi, N.E.H recruits Vietnamese as labor in company. This helps company reduce many costs since labor sources in Vietnam is high, average salary is low and they do not rent or care about living quarters of their staves much… To avoid resignation of some employees, N.E.H should care about staves living more. For example, they can organize more relax actions for staves; create funds supporting for staves in special situations such as accident, pregnant, or their family meet difficulty… These actions will encourage staves and they definitely contribute to N.E.H more. However, the important is that Vietnamese staves must change their working manners themselves. Because working in accordance with process is the common working in foreign companies that Vietnamese companies should learn to improve ourselves. Lessons for Vietnamese enterprises: Deploying ERP system in Vietnamese enterprises: In the integration period, Vietnamese enterprises have been facing more competition because of the appearance of more and more big foreign companies. We have researched solutions for improvement of Vietnamese enterprises. Realizing the important roles and advantages of ERP, in 2007, many Vietnamese companies deployed ERP system. A few Vietnamese companies have deployed ERP, so we do not have enough experience to choose ERP and suitable ERP supplier. Right from the beginning, companies do not have a good strategy for this choice; therefore, large companies should ask for ERP advisors’ choice and at last the decision belongs to companies, not advisors. Smaller companies can contact ERP suppliers in their product shows to find out the most suitable choice. These are some advances when choosing ERP solution [2]: The first is suitability which is the most important. It does not care much about which solution is strong or weak but suitability of solution to your company. An ERP for a large company is improbable but is suitable to a small company and conversely a small solution is not suitable to a large scale company. An ERP, good at manufacture field, can not be suitable for a commercial company. A solution at higher price is more suitable than a solution at lower price… Suitability is expressed in enterprise scale, business field and career, enterprise’s needs and especially whether enterprise will be expanded or not in the near or far future… The second, price is not the most important respect. You should define the maximum and minimum cost according to your company’s finance and choose the most suitable ERP that cost in this gap. Do not try too much to catch an expensive ERP since it is impossible to be suitable for your company but do not save too much to have the cheapest ERP since it can not meet your company’s needs. Price of an ERP can not resemble its’ efficiency because it depends much on supplier’s sale strategy. The third, consider the demo of products as much as possible. It helps you have many different outlooks on ERP products. Thanks to this, you can find out the best ERP for your company. It can take much time, but you should do because ERP project can affect your company’s future. You must consider company’s needs thoroughly and find out the most important things that ERP has to meet. The fourth, a dynamic solution is the one that can change easily when company changes. To implement an ERP project, you can lose many years. Right now, companies can change something. Therefore, ERP can be changed to meet the needs of every company. If you choose a suitable solution for today, your company will have problems when ERP is improved or expanded. An enterprise that is not too large should choose domestic solutions because it is easier to change than foreign products. Foreign solutions can be good at international management model but it is unsuitable for Vietnamese companies, especially it is difficult to change deeply because domestic deploying advisor is not the software manufacturer. The fifth, as a customer who ever used or is using ERP products, you should not make a decision just by basing on suppliers’ solution presentation because when you have no experience, you will believe easily in showers. All solutions are fine but it is just your feeling and maybe it is not true. Therefore, you should refer to customers, who have the similar scale, business field, and applied this solution successfully. This solution has more chance of success. Those are some advices for Vietnamese companies to deploy ERP system. However, deploying ERP in almost Vietnamese companies will be reality in the long term; in the short term, accounting software is still suitable to almost Vietnamese companies have small or medium scale. Because, Vietnam has approximate 140.000 enterprises, almost of them are small and medium enterprises, commercial and service field makes up a high rate. With these enterprises, ERP solution has been not necessary yet. In addition, price of an ERP system is at least 20.000 USD (not include consultancy fees). Meanwhile, average cost of accounting software per computer is about 1.000 USD only and the effect can be appeared immediately. Anyway to have a stable development, in the long term, Vietnamese companies should research to deploy ERP solution. Contribute enterprise culture with ERP: Enterprise culture has a considerable effect on success of deploying ERP solution. When an ERP project is applied unsuccessfully, we usually blame technique for that. However your company had not supplied enough power to manage and train employers for the enterprise culture [6]. The first, change from wont working to process working: To a company that has a high intensity, staves have a habit of dynamic working and they can apply ERP more successfully. For a manager who is not hesitating to renovate, it will create a determination for the whole company, impulse ERP applying process quickly in the company. Enterprise culture is expressed clearly when applying mandatory process of ERP. Whether staves observe this process or not will affect the result of application and success of project. For instance, in warehouse management, the solution which compels that before materials are out-stored must create using materials note then used materials. According to the habit of staves, they can use materials first then create using materials note or sometimes forget inputting data… These can cause the difference between system and reality, therefore can affect other departments and decision of managers. ERP is always accompanied by an integrated standard process, so it creates challenges to change staves’ working manners. Therefore, when applying ERP, enterprise must have a concentrative management, all of managers and staves must care about company’s target. Many enterprises applied ERP not only to change business process but also to improve their enterprise culture. To other software such as accounting software or MS office in company, whether each staff exploits it actively or not can not affect general activities of company but ERP is a very different environment. Every effect of any staff on this system always affects many difference stages of company. Data which is input for one time is the united data for all process. Therefore, every staff in company must have a thorough grasp of this system and have good sense in work. Information and figures which are integrated by sale, purchase, accounting stage… from connecting computers in company helps manager have a thorough and general view of company. If each staff still keeps old working manner, do not understand the real target of new system, it is difficult to have a successful application of ERP system in this company. The model technology brings pressure to change on every staff and the whole of company. If staves do not change or improve them or do not understand the new system, they might be eliminated. The second train to increase staves and managers’ awareness: When deploying to apply ERP, it is very necessary to train all staves about this system and the way to use it. At first, principles can create conditions to implement works, however making it become a working habit and a normal working condition at company depends on the enterprise culture and it takes a lot of time in changing from old to new manner, from liberal or half-liberal working to standard process. A standard process requires an exact conformation of different positions, sometimes it creates strong reactions. Even they can think “I can bring back much money to company, I can do anything I want provided safety and profitability”. It is not easy to train these people like that. However, they must change to adapt and dynamic people also understand themselves easily that when they work according to standard process, their works will be guaranteed and safer. Enterprise must repair for their staves by showing role of each department. Beside training on technology, an enterprise need to supply information about new tasks at an old position, about the target of enterprise and advantages that the new system can bring back for enterprise as well as each member in enterprise. Lesson for materials accounting and management of materials: Materials play an important role in production especially manufacturing companies. Whether quality of materials is good or not will affect the quality of products; cost of materials is low or high will affect cost price of product. In general, materials affect considerably profitability of company. Therefore, a company must consider choosing the most suitable supplier carefully. In addition, company also should keep on purchasing materials from familiar suppliers to ensure quality of materials as well as maintain good relationship. To manage materials efficiently and suitably, they must be encoded and input into the system. All transactions involving materials are implemented by these codes and the system will calculate as well as implement entries for you. Also due to automatism of ERP system, when the system gets an order, it will consider the implementing ability of company and calculate correlative materials for production then it creates PO for these materials. Therefore, to manage materials and avoid stagnant of materials in warehouse, you must control these PO. If stagnant of materials happens, you should cancel PO for a period of time. This help your company raise inventory cycle. With ERP system, transactions accounting entry is not the beginning but the result of information treatment process. Each transaction in the manufacture process is recorded by an entry in the system. Transaction process is divided into many difference stages and accounting transaction is divided into different pairs of entry. For instance, in the process of purchase materials, materials receiving entry is correlative with materials in-stored entry; Beyond general accounting subsystem implementing entries directly like normal accounting software, other subsystems of ERP implementing entries automatically and rule 1:n or n:1 do not exist. This is an important issue to almost Vietnamese accountants since we are familiar with controlling data. However, we must care about a basic difference between ERP and accounting software that is entries are produced automatically and controlled in many layers through approval process; therefore, shortcomings of accounting are very rare. As the meaning of the system is shown through business activities of an enterprise, ERP system does not allow users to delete any entry input into system. Users can use reverse entry only. Therefore, accountants must be very careful because all mistakes of them can be always checked. Because accounting is done together with transaction movement, accounting system always reflects timely and honestly business activities at each stage in the system. It supplies information in many aspects; therefore it helps managers make decisions suitably. In the ERP system, accounting plays a controlling role in all activities through figures that system reflects. CONCLUSION In the global integration tendency, enterprises must compete fairly to exist and develop. They have found many ways to increase their market share such as: improve quality of products, marketing… During recent years, enterprises have researched and contributed the model management system ERP for whole company. This is the solution for enterprises to compete successfully. After the training period in Nissei Electric Hanoi Co.,Ltd; I have studied a lot knowledge on materials accounting and operation of ERP system under the BPCS software as the management system of N.E.H. I saw many advantages in this system as well as some disadvantages. Thanks to this thesis: In Chapter 1, I present some basic theory on materials accounting; In Chapter 2: I try to present materials accounting in N.E.H as well as role of ERP system in materials management; In Chapter 3: I give some opinion about management system, materials management and BPCS of N.E.H; from that, I present some solutions to improve N.E.H in general and materials accounting in N.E.H in detail. However, the main idea that I would like to recommend is lessons for Vietnamese companies to integrate successfully. However, because of the limitation of practicing time and my knowledge, the thesis cannot avoid mistakes; I would like to receive contribution from readers for improvement of content as well as form for my thesis. Moreover, I would like to send my special thanks to Ms. Nguyen Thi Quyen – The Chief Accountant in N.E.H, other accountants in Accounting Department, especially Mrs. Nguyen Phuong Thao – Materials Accountant in N.E.H for helping me fervently when I practice in N.E.H; and I would like to great thanks to Dr. Luu Duc Tuyen and MA. Nguyen Phuong Tuyen and other teachers in Accademy of Finance for helping me to complete this thesis. REFERENCES Vietnamese documents: Chuẩn mực kế toán Việt Nam số 02 Giáo trình Kế toán Tài chính, NXB Tài chính, Hà Nội - 2006 (87-104) Lựa chọn sản phẩm và nhà tư vấn triển khai ERP, www.vinaco.info Nhìn lại một năm ERP Việt Nam, www.pcworld.com.vn Người làm ERP nói về ERP, www.vnmedia.vn Phần mềm kế toán trước “trào lưu” ERP, www.isys.com.vn Thay đổi văn hóa doanh nghiệp với ERP, www.pcworld.com.vn www.tapchiketoan.com, mục “Tài sản ngắn hạn” English documents: BPCS, Enterprise Resource Planning, ERP and Administration needs, www.exforsys.com Inventory, www.en.wikipedia.org/wiki/Inventor Jerry J. Weygandt, Donald E. Kieso, Walter G. Kell, Accounting principles I, Thang Long University, Hanoi - 2006, Chapter 9 (357-395) Keith F Bird, How to Pass Book-keeping - First Level, London Chamber of Commerce and Industry Commercial Education Trust (LCCI) Nissei Electric Co website, www.nissei-el.co.jp/english/index.htm Universal Business Language, TABLE OF CONTENT PREFACE 1 CHAPTER I: GENERAL THEORY FOR MATERIALS ACCOUNTING IN PRODUCTIVE ENTERPRISES 3 1.1. Materials and materials accounting issues 3 1.1.1. Definition and characteristic of materials 3 1.1.2. Classification of materials 3 1.1.2.1. According to materials’ use 3 1.1.2.2. According to suppliers 4 1.1.2.3. According to purpose using 4 1.1.3. Measurement of materials 4 1.1.3.1. Determine cost of materials stored 5 1.1.3.2. Determine cost of materials used 6 1.1.4. Managing requirement and accounting duty for materials 9 1.1.4.1. Managing requirement for materials 9 1.1.4.2. Accounting duty for materials 10 1.2. Materials accounting 10 1.2.1. Detail accounting for materials 10 1.2.1.1. Parallel inventory cards method 12 1.2.1.2. Balance books recording method 12 1.2.1.3. Rotation collation books recording method 13 1.2.2. Synthetic accounting for materials 14 1.2.2.1. Periodic inventory system 14 1.2.2.2. Perpetual inventory system 17 1.2.3 Accounting for stock taking and revaluating of materials 20 1.2.4. Provision for decline in materials 22 1.2.5. Form of accounting books 23 1.2.6. Accounting software for materials accounting 25 CHAPTER II: MATERIALS ACCOUNTING IN NISSEI ELECTRIC HANOI COMPANY 27 2.1. Nissei group and Nissei Electric Hanoi Co.,Ltd 27 2.1.1. Nissei group 27 2.1.2. Nissei Electric Hanoi Company 30 2.1.2.1. The foundation and development process of the company 30 2.1.2.2. The characteristic of producing organization 31 2.1.2.3. The characteristic of management of the company 34 2.1.2.4. The characteristic of accounting system of N.E.H 37 2.2. Materials accounting in N.E.H 41 2.2.1. Accounts used for materials accounting 41 2.2.2. Characteristic and management of materials in N.E.H 42 2.2.3. Materials accounting at the beginning of month 46 2.2.4. Procedures for increment of materials in N.E.H 49 2.2.5. Cost of materials stored and examples 51 2.2.6. Materials accounting at the end of month 61 2.2.7. Some special transactions 66 2.2.8. Materials accounting books 69 CHAPTER III: SUGGESTIONS TO IMPROVE MATERIALS ACCOUNTING IN NISSEI ELECTRIC HANOI COMPANY AND LESSONS FOR VIETNAMESE COMPANIES 72 3.1. Suggestions to improve materials accounting in N.E.H 72 3.1.1. Opinions of materials accounting in N.E.H 72 3.1.1.1. Management system 72 3.1.1.2. Materials management 73 3.1.1.3. BPCS software 74 3.1.2. Suggestion to improve materials accounting in N.E.H 80 3.1.2.1. Classification and management of materials 80 3.1.2.2. Documents and reports 81 3.1.2.3. Other general solutions for N.E.H 81 3.2. Lessons for Vietnamese enterprises 81 3.2.1. Deploying ERP system in Vietnamese enterprises 81 3.2.2. Contribute enterprise culture with ERP 83 3.2.3. Lesson for materials accounting and management of materials 85