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MINISTRY OF EDUCATION AND TRAINING THUONG MAI UNIVERSITY DANG THI HUE ACCOUNTING OF FIXED ASSETS IN COAL MINING ENTERPRISES OF VINACOMIN Major: Accounting Code: 62.34.03.01 EXECUTIVE SUMMARY OF PHD DISSERTATION Hanoi, 2019 The thesis was completed at Thuong Mai University Academic supervisors: Ass.Professor, PhD Pham Thi Thu Thuy Ass.Professor, PhD Le Thi Thanh Hai Reviewer 1: Reviewer 2: Reviewer 3: The dissertation will be defended university level council of dissertation at Thuong Mai University Time: date month year 20 The dissertation can be found at the Vietnamese National Library and the Library of Thuong Mai University INTRODUCTION Rationale In the process of integration and development, the international accounting system on fixed assets has constantly been improved Regulations on identification, valuation and recognition of fixed assets have been mentioned in a comprehensive, systematic and more synchronous way in the relevant standards It includes the regulation on the application of different pricing models to record and present information about fixed assets as well as regulations on accounting of environmental recovery costs; to identify and record the decline inn value of fixed assets; accounting of mineral pre-exploration costs Vietnam is in the process of operating the socialist-oriented market mechanism, with open economic policies, attracting foreign investment capital and gradually integrating with the world economy To meet the requirements of this process, Vietnamese accounting system has been constantly improved However, the updating and appropriately applying the current regulations on accounting of fixed assets of international accounting standards are still limited and not yet paid sufficient attention In recent years, the mining industry of Vietnam in general, the coal mining industry in particular has made an important contribution to the socio-economic development, contributing positively and effectively to ensuring energy security and to meet the domestic coal demand Along with the technology revolution 4.0, coal mining enterprises continue to equip and renew fixed assets to access processes of modern mining technology, contributing to increasing productivity, promoting the substainable development of coal industry In coal mining enterprises, fixed assets account for a relatively large proportion in the total asset value of enterprises, thus fixed asset accounting is considered an important part of the accounting system of these enterprises The application of the pricing model to identify, record and present information about fixed assets in coal mining enterprises is also a matter for discussion and consideration Recovery and protection of the ecological environment are also issues requiring sufficient attention However, the regulations on accounting of environmental recovery costs are only first mentioned in Circular No 200/2014 / TT-BTC of the Ministry of Finance, leading to the fact that the application of this regulation in coal mining enterprises still faces many problems In addition, the industrial revolution 4.0 has caused coal mining enterprises to face many challenges such as unupdated technology, decline in asset value during usage On which basis and how to to identify and record the decline is also a problem for coal mining enterprises in the current context In addition, how to effectively manage and use fixed assets is also a problem for coal mining enterprises Important and decisive information that governs the investment as well as the use of fixed assets is provided by the management accounting of fixed assets However, in the coal mining enterprises of Vinacomin cureently, the management accounting of fixed assets has not been properly concerned by the managers, the information collected when developing investment plans is not clear and complete, mainly predictive The provision of fixed asset accounting information under management accounting perspective affects the planning, control and evaluation of the implementation within the enterprise Therefore, this issue needs to be researched and improved For the mentioned reasons, the author decided to choose "Accounting of fixed assets in coal mining enterprises of Vietnam National Coal and Mineral Industries Holding Corporation" as the research topic of the thesis Overview of research From an overview of studies published in Vietnam and in the world on fixed assets and accounting of fixed assets, the PhD student found out that the previous studies have focused on the content of measuring, recording fixed assets and presenting in financial statements; studying the compliance of fixed asset accounting in some countries with common practice, international accounting standards; the content and extent of application of fixed asset depreciation methods The studies on fixed asset accounting is mainly based on the financial perspective accounting, not yet focusing on the effects of price calculation and fixed asset accounting according to the price calculation basis, therefore the appropriate choice of price calculation basis for fixed assets has not been made In addition, no research has fully and comprehensively made regarding fixed asset accounting under management accounting perspective Therefore, the author decided to research on some issues for further research and development in the thesis as follows: - Firstly, to study and analyze the views on fixed asset measurement based on different price evaluation to select the appropriate price calculation method for fixed assets of Vietnamese enterprises and at the same time to apply in Vinacomin’s coal mining enterprises - Secondly, to analyze and clarify the theoretical basis of accounting of fixed asset transactions with specific characteristics of coal mining enterprises, including mining rights, mineral pre-exploration costs, environmental recovery costs and apply these theories in coal mining enterprises of Vinacomin - Thirdly, studying fixed asset accounting under management accoungting perspective to enhance the efficiency of using fixed assets in coal mining enterprises of Vinacomin Research objectives and tasks The consistent objective of the dissertation is to research and propose solutions to improve fixed asset accounting in coal mining enterprises of Vinacomin in order to improve the quality of accounting information on fixed assets, as well as the efficiency of managing and using fixed assets With the above research objectives, the thesis defines specific tasks as follows: - Systematizing and clarifying the theoretical basis of fixed assets, accounting of fixed assets in enterprises, paying attention to the accounting of fixed assets according to the viewpoint of original prices and re-evaluation prices, thereby proposing a suitable price calculation basis for fixed assets in enterprises - Surveying, analyzing and assessing the actual status of fixed asset accounting in Vinacomin’s coal mining enterprises to confirm the achieved results and limitations of fixed asset accounting in these enterprises - Determining the factors and the level of influence of these factors on fixed asset accounting in Vinacomin’s coal mining enterprises - Proposing solutions to improve fixed asset accounting in coal mining companies of Vinacomin, contributing to improving the quality of accounting information on fixed assets, the effectiveness of managing and using fixed assets in these enterprises Subjects and scope of the study 4.1 Research subjects The PhD thesis studies the theoretical and practical issues of fixed asset accounting in coal mining enterprises of Vinacomin In particular, the thesis focuses on studying the principles of measuring, recording, presenting and providing information on fixed assets as well as the method to collect, process, analyze and provide information in respond to requirements of fixed asset management The thesis studies the application of these principles in the practice of fixed asset accounting in Vinacomin's coal mining enterprises 4.2 Research scope - Research content: The thesis only focuses on studying fixed asset accounting for production and business activities according to the financial accounting and management accounting angles; excluding accounting of outsourced fixed assets and investment in real estate - Research space: The thesis focuses on studying fixed asset accounting in coal mining enterprises which are subsidiaries of the Group and Joint ventures of Vinacomin The dissertation only studies accounting of fixed assets in coal mining enterprises for the preparation of separate financial statements, not the information presented on the consolidated financial statements - Research period: The real information data are collected and analyzed for the period of 2014 - 2018 Research questions To achieve the research objectives, the research questions are raised as follows: (1) What is the rationale for fixed assets and accounting of fixed assets under financial and management accounting perspectives and what are factors affecting fixed asset accounting in enterprises? (2) What is the accounting of fixed assets in view of the original price, the re-evaluation price and the appropriate price calculation basis for fixed assets? (3) What is the actual situation of fixed asset accounting under the financial and accouting perspective in Vinacomin’s coal mining enterprises currently? (4) How these factors affect fixed asset accounting in coal mining companies of Vinacomin? (5) What measures should be taken to improve the accounting of fixed assets in Vinacomin’s coal mining enterprises under the financial and management accoungting perspective? Research methods and processes 6.1 Research Methods The thesis uses the methods of investigation, interview, descriptive statistics, summarizing, analyzing and comparing to systematize the theoretical basis of fixed assets, fixed asset accounting in enterprises and conduct surveys of the actual situation of fixed asset accounting according to financial accounting and management accounting perspective, factors affecting the accounting of fixed assets in coal mining enterprises of Vinacomin From the research results, limitations and causes are drawn as a basis for proposing solutions in Chapter 6.2 Research process The research process includes the following steps: - Step 1: Identify the problem for the study - Step 2: Overview of Vietnamese and foreign studies related to the dissertation topic and identify research "gaps" - Step 3: Identify objectives, subjects, scope and research questions - Step 4: Systematize the theoretical basis on the fixed assets and fixed asset accounting in enterprises - Step 5: Conduct surveys of fixed asset accounting situation in coal mining enterprises of Vinacomin - Step 6: Conclusions, suggestions and recommendations New contributions of the thesis In terms of academics and reasoning: The thesis has clarified the theoretical issues of fixed asset accounting from the view of the original price and the reevaluation price, thereby selecting the appropriate price calculation basis for fixed assets In addition, the thesis also clarified the accounting of mining rights; mineral pre-exploration costs and environmental reconstitution costs in coal mining enterprises In terms of practice: The thesis has conducted surveys, analyzed and comprehensively assessed fixed asset accounting in Vinacomin’s coal mining enterprises in both angles of financial accounting and management accounting The thesis has selected a appropriate basis for calculating prices for fixed assets in Vietnamese enterprises in general and coal mining enterprises in VINACOMIN in particular, which is the original price combined with accounting of the declining value of fixed assets in case of the degraded fixed assets with the aim of providing complete, reliable and transparent information about fixed assets for users The thesis has proposed solutions to improve the accounting of featured fixed assets in coal mining enterprises including mineral exploitation rights; mineral preexploration costs and environmental recovery costs In addition, the thesis also proposes solutions on improving management accounting of fixed assets to provide information for making decisions regarding investment, management and using assets The structure of the thesis In addition to the Introduction, the conclusion references and appendices, the thesis consists of chapters: Chapter 1: Literature review of fixed assets and fixed asset accounting in enterprises Chapter 2: Current situation of fixed asset accounting in coal mining enterprises of VINACOMIN Chapter 3: Solutions to improve accounting in coal mining enterprises of VINACOMIN Chapter LITERATURE REVIEW OF FIXED ASSETS AND FIXED ASSET ACCOUNTING IN ENTERPRISES 1.1 Fixed assets and the role of fixed asset information for management 1.1.1 Definition and classification of fixed assets 1.1.1.1 Definition of fixed assets Currently, there are a number of different views on fixed assets, from the author's point of view: Fixed assets are assets controlled by an accounting unit with great value and determined reliably and used for a long period of time and they will bring certain future economic benefits to the unit 1.1.1.2 Classification of fixed assets - Classified in the form of manifestations, fixed assets in enterprises include: tangible fixed assets and intangible fixed assets - Classified by ownership, fixed assets in enterprises include: proprietary fixed assets and outsourced fixed assets - Classified by purpose and usage, fixed assets in enterprises include: Fixed assets used for production and business activities; Fixed assets used for welfare, security and defense purposes; Fixed assets awaiting handling and fixed assets receiving preservation and custody for other subjects 1.1.2 The role of fixed asset accounting information for management For corporate management Fixed asset accounting information is used for planning and estimation process; organizing implementation; checking; decision-making process and contributing to innovation and management improvement in enterprises For third parties Fixed asset information not only serves the needs of business management but also serves third parties such as investors, banks and credit institutions and state management agencies in making appropriate decisions 1.2 Accounting of fixed assets in enterprises under the perspective of financial accounting 1.2.1 Principles and requirements of fixed asset accounting in enterprises 1.2.1.1 Principles of fixed asset accounting All economic transactions related to fixed assets are recorded on an accrual basis Information on fixed assets must be measured, recorded and presented on the financial statements objectively and on the basis of generally accepted price calculation basis The costs that businesses have spent when investing in fixed assets must be consistent with the benefits that assets bring The recognition of fixed asset depreciation expenses must correspond to the turnover generated by fixed assets in each accounting period According to the principle of consistency, the policies and methods of accounting of selected fixed assets must be uniformly applied at least in an annual accounting period Businesses are not valued higher than the value of fixed assets Therefore, information on depreciation of fixed assets should be considered on the basis of prudent principles Fixed asset accounting must collect, process and fully provide information of essential nature about fixed assets 1.2.1.2 Requirement in fixed asset accounting Accounting reflects fully, promptly, accurately, clearly and comprehensively economic transactions arising regarding fixed assets in accounting vouchers, accounting books and financial statements Information and accounting data of fixed assets must reflect honestly and objectively in accordance with the current status, nature, content and value of fixed asset transactions; at the same time, information must be reflect continuously and classified, arranged in a scientific, systematic, verifiable and comparable order 1.2.2 Fixed asset accounting according to view of price calculation 1.2.2.1 Overview of the views on calculating prices for assets in accounting Calculating prices for assets from the ‘original price’ point of view According to original price, assets are measured, recorded and presented in financial statements on the basis of historical costs Historical cost is the total cost that the unit has actually spent on asset formation Calculating prices for assets according to the re-evaluation point of view In this view, after initial recognition, the property must be measured, recorded at the re-assessed price Re-evaluation prices can be general prices, current prices, output prices or fair values 1.2.2.2 Fixed asset accounting according to price calculation points of view  Accounting of fixed assets from the ‘original price’ point of view Initial measurement and recognition of fixed assets At the time of determining the initial value, fixed assets are recorded at original price which includes all initial direct related costs to form fixed assets In addition to guiding the measurement and recording of common fixed assets for production and business activities, IASB also issues accounting standard guidelines to measure and record the specifically featured fixed assets of the mining industry as follows : - Firstly, mineral pre-exploration costs: According to international financial record standards (IFRS 06) - "Exploration and assessment of natural resources and minerals", mineral exploration costs are recorded as intangible fixed assets Accordingly, this asset is measured, initially recorded at the original price, including all the expenses that the enterprise has spent on mineral pre-exploration drilling provided that the exploration drilling results discover a reserve of minerals - Secondly, regarding mineral exploitation rights: According to IFRS 06, the cost of purchasing mineral rights is recognized as intangible fixed assets At the time of initial recognition, this asset is recognized at original price, which includes all the expenses paid by the entity to obtain mining rights such as the cost of obtaining a license exploitation, cost of granting mining rights - Thirdly, the cost of environmental recovery costs: according to international accounting standard No 37 (IAS 37) - "Reserves, contingent liabilities and potential assets", environmental recovery costs are compulsory expenses at a specified time in the future with a defined value, related to the mining project of the enterprise Also according IAS 16, enterprises must initially estimate the cost of destruction, returning the site and restoring the original status as well as obligations that the organization incurs (recovery costs) when buying property or using properties in a certain period Thus, the recovery cost is the cost that constitutes the original price of the tangible fixed assets Measuring and recording fixed assets after initial recognition Firstly, identifying and recording the depreciation value of fixed assets: In order to calculate the depreciation value of fixed assets in each stage of production and business period, enterprises must allocate the original value of fixed assets to the years of using assets by the company Enterprises often use straight-line depreciation method; Decclining balance depreciation method and output-based depreciation method to calculate depreciation of fixed assets Secondly, identify and record the costs incurred after the initial recognition of fixed assets: The costs incurred after the initial recognition of fixed assets may include: (i) repair costs to maintain the operational capacity of the fixed assets; (ii) the cost of repair and upgrading increases the value of fixed assets (recording the increase in original cost of fixed assets); (iii) fixed asset depreciation costs for the purpose of recovering investment capital in which depreciation expense of fixed assets has been presented by the author Third, identify and record accumulated losses due to depreciation of fixed assets: After original recognition, due to many factors, fixed assets may decline in value In order to reflect the true value of fixed assets at the time of constructing financial statements, the accountants should determine the decline value of fixed assets Therefore, after initial recognition, fixed assets are determined and recorded according to the remaining value, equal to original price minus (-) accumulated depreciation value and accumulated losses due to the decline in value of fixed assets (if any) Stop recording fixed assets 11 nature of production and business activities, management and organization characteristics Assessment of investment efficiency and use of fixed assets: In order to obtain useful information on investment, management and use of fixed assets, accountants need to build a system of indicators to reflect the investment situation of fixed assets and technical status and effective use of fixed assets in enterprises 1.4 Factors affecting fixed asset accounting in enterprises 1.4.1 Internal factors - Scale and characteristics of production and business activities of enterprises; - Views and perceptions of enterprise’s management; - Accounting staff’s qualifications 1.4.2 External factors - Market and competition; - Legal regulations on accounting; - Application of information technology in accounting 1.5 Accounting of fixed assets in some countries around the world and experience lessons for Vietnam Research on experience of calculating fixed asset prices, accounting for specific fixed asset transactions in mining enterprises as well as fixed asset management accounting in some typical countries in the world such as the US and China, some lessons are drawn for coal mining enterprises of Vinacomin: Firstly, selectinging the basis for calculating the price of fixed assets According to US and Chinese accounting, fixed assets are initially recorded according to the original price principle in combination with reflecting the decline in value of fixed assets According to prudent requirements, in case of fixed asset depreciation, enterprises need to record and present the decline in value in financial statements Secondly, the identification and recognition of some specifically-featured fixed asset transactions - Enterprises should capitalize mineral pre-exploration costs as intangible fixed assets if they meet the conditions for recognition - The cost of mining rights is very large, so it needs to be recognized according to its nature Therefore, mining companies should record mineral exploitation rights as intangible fixed assets - Environmental recovery costs should be recorded as the costs contributing to the original price of tangible fixed assets Thirdly, regarding accounting for decline in the value of fixed assets When one of the signs of value decline occurs, the enterprise must determine the recoverable value of the fixed asset The recoverable value of fixed asset is the higher price between fair value minus the cost of sale and the usage value of the asset If the 12 recoverable value of the asset is less than the book value, the accountants must record the declining value of the fixed asset: recording the increase in cost and the reduction of fixed assets exactly according to the reduced value When there are signs of recovery of fixed asset value, the recoverable value of fixed asset becomes higher than the book value, the accountants not record an increase in fixed asset value or an increase in income to ensure the compliance with the prudent principle and avoid the adjustment in recording the increasing income required by the business management Fourthly, presenting fixed asset accounting information - Enterprises need to present methods of measuring asset value at original cost - On the date of constructing financial statements, if fixed assets in enterprises show signs of decline in value, it is necessary for accountants to assess the decline in that value of fixed assets and should present this information in the financial statements In addition, enterprises need to reflect information on long-term assets held for sale and terminated operations (if any) CONCLUSION OF CHAPTER In chapter 1, the thesis has analyzed and clarified in detail general issues of fixed assets and fixed asset accounting in enterprises, including identification and determination of initial value, recognition and presentation of fixed assets according to two views on price calculation - the original price and the re-evaluation price At the same time, the thesis also studies the measurement and recognition of specifically-featured fixed assets of mining enterprises In particular, the thesis emphasizes the accounting of declining value of fixed assets, presenting information on long-term assets held for sale and terminated activities - an issue that has not mentioned in Vietnam In addition to examining fixed asset accounting from the perspective of financial accounting, the thesis also studies fixed asset accounting under management accounting perspective On the basis of fixed asset accounting according to the accounting system in the US and China, experience lessons are drawn for fixed asset accounting in coal mining enterprises of Vinacomin Chapter CURRENT SITUATION OF FIXED ASSET ACCOUNTING IN COAL MINING ENTERPRISES OF VINACOMIN 2.1 Overview of Vinacomin and coal mining enterprises of Vinacomin 2.1.1 Overview of Vinacomin 2.1.1.1 History and development process of Vinacomin Vietnam Coal - Mineral Industry Group (formerly known as Vietnam Coal Corporation under Decision No 563 / TTg dated 10/10/1994 of the Prime Minister) with an international transaction name of Vietnam National Coal and Mineral Industries Holding Corporation, or Vinacomin, was established in accordance with 13 Decision No 345/2005 / QD-TTg dated December 26, 2005 Vinacomin is currently implementing important business activities in the fields of coal industry; mineral and metallurgical industry; power industry and industrial explosive materials 2.1.1.2 The organizational structure and management apparatus of Vinacomin The subsidiaries in Vinacomin are closely connected and organized according to the parent company - subsidiary model with the "Multi-level Group" structure By 5/2018, excluding 11 affiliated companies, Vinacomin has 66 member units including the parent company of the Group, level subsidiaries, level subsidiaries, affiliated units, and revenue-generating units 2.1.1.3 Organization of accounting system and accounting policy of Vinacomin Organization of accounting apparatus at the parent company Vinacomin parent company is a combination of many subordinate units with scattered operating areas Therefore, the accounting system at the parent company is organized according to the model of both concentration and dispersion Accounting policy applied at Vinacomin In addition to the application of accounting standards, enterprises under Vinacomin are currently implementing Circular 200 / TT-BTC and Circular No a53 / 2006 / TT-BTC At the same time, the enterprises in the Group also follow Decision 2917/QD-HDQT of Vinacomin For the management of fixed assets, Vinacomin issued Decision 2873 / QD-Vinacomin and Decision 1764/QD-TKV applied accordingly in units in Vinacomin 2.1.2 Characteristics of organizational structure, management and production and business activities of coal mining enterprises in Vinacomin 2.1.2.1 Characteristics of management organization in coal mining enterprises in Vinacomin Coal mining companies of Vinacomin include companies with 100% chartered capital of Vinacomin (Group branch) and 10 subsidiaries, which are JSC with Vinacomin’s holding dominant shares These companies all organize the management mechanism according to the online functional model, each part of the enterprise takes responsibility independently 2.1.2.2 Characteristics of production and business activities of coal mining enterprises of Vinacomin affecting the accounting of fixed assets In coal mining enterprises of Vinacomin, in addition to coal mining and trading activities, there are business and production activities in some other areas, thus fixed assets are spread in the coal mining area and in division and departments in enterprises The process of coal mining is carried out mainly outdoors or in the ground and the installation process, the construction of the mining system often takes a long time These characteristics significantly affect the process of managing, using and accounting fixed assets in coal mining enterprises of Vinacomin 14 2.1.2.3 Organizing accounting work in coal mining enterprises of Vinacomin Most coal mining enterprises of Vinacomin organize centralized accounting apparatus Enterprises all apply the journal-documents accounting method 2.2 Current situation of fixed asset accounting in coal mining enterprises of Viancomin 2.2.1 Current situation of fixed asset accounting at Vinacomin’s coal mining enterprises under the view of financial accounting 2.2.1.1 Initial measurement and recognition of fixed assets The initial and post-initial recognition of fixed assets in Vinacomin’s coal mining enterprises is based on the original price The accountant records the costs of exploration of natural resources and minerals into prepaid expenses (Account 242) and then allocates them gradually into production costs (Account 627) or directly accounts for general production costs (Account 627) in the accounting period All costs of acquiring mining rights are recorded in prepaid expenses (Account 242), then allocated to production costs (TK 627) Many respondents (66.67%) answered that in their enterprises, environmental recovery costs such as land reclamation costs and accountants all recorded these costs into production costs (Account 627) to calculate the cost price of exploited coal and mineral products 2.2.1.2 Measure and record fixed assets after initial recognition In coal mining enterprises of Vinacomin, fixed assets are initially recognized according to original price, output price and remaining price The enterprises surveyed all said that fixed assets were still recorded later at the initial cost Then, value is determined by original price minus (-) declined value Current situation of applying depreciation method and fixed asset depreciation accounting Enterprises all use straight-line depreciation method to calculate the depreciation for fixed assets in enterprises 16.67% of respondents answered that enterprises applied both methods including straight-line method and declining depreciation method depending on the characteristics of each fixed asset Most respondents (77.78%) believed that enterprises use fixed asset depreciation according to the principle of round month After calculating fixed asset depreciation, accountants record the amount of depreciation deduction in the period into expenses according to the accounting regulations of accounting standards Current situation of repair cost accounting for fixed asset The surveyed enterprises recorded the maintenance and repair costs of fixed assets on a regular basis in the period (Debit Account 627, Acc 641 and Acc 642) For major repair costs of fixed assets: 72.22% of the respondents said that enterprises did not make plans for major repairs of fixed assets, therefore they did not accrue repair expenses for fixed assets When this cost is incurred, it is recognized as 15 prepaid expenses (Account 242), then proceeded to allocate gradually to the objects of related costs Regarding the cost of renovation and upgrading: 38.89% of respondents said that the entire cost of renovation and upgrading is gathered on Account 2413 and transferred to Account 242, then gradually allocated to the objects who bear the costs (Account 627, Account 641, Account 642) Current status of accounting for decline in value of fixed assets According to the survey results, 83.33% of respondents said there were signs of declining value of fixed assets in Vinacomin’s coal mining enterprises However, these companies have not yet recorded the decline in the value of fixed assets 2.2.1.3 Stop recording fixed assets The enterprises stopped recording fixed assets in case of liquidation and sale of assets and 16.67% said that enterprises stopped recording fixed assets in case of transferring fixed assets 2.2.1.4 Presentation of fixed asset accounting information on financial statements Information on fixed assets presented by coal mining enterprises of Vinacomin in financial statements according to the criteria: Original price, depreciated value and remaining value Content related to fixed assets is required to explain in detail on the notes on financial statements All companies presented in financial statements information about fixed assets as required by VAS 03 and VAS 04 2.2.2 Current situation of fixed asset accounting at Vinacomin’s coal mining enterprises under the perspective of management accounting 2.2.2.1 Current situation of management accounting in collecting, processing, analyszing and providing information for making decisions on fixed asset investment in Vinacomin’s coal mining enterprises Current situation of collecting fixed asset information: According to the indepth interview results, coal mining enterprises of Vinacomin collected information on fixed assets including implementation information which is related to purchase, equipment, depreciation, repair, transfer, liquidation, and sale of fixed assets and future information is the information on estimates of revenue flows and expenditure flows; budget estimates of fixed assets; market prices of fixed assets; information on properties, usage and technical parameters of investment assets that are about to be invested The regulation on coordination of work between the fixed asset management accounting division and the relevant departments has not yet fully implemented, which could not improve the role of management accounting of fixed assets Current situation of processing information of fixed assets: Subjects participating in the process of processing information related to fixed asset 16 investment include: fixed asset accountants, chief accountant (or deputy accounting manager), heads (or deputy heads) of other professional departments in businesses 61.11% of enterprises applied accounting software to assist in dealing with fixed asset accounting information; 38.89% of enterprises have not yet applied accounting software, thus the handling of fixed asset accounting information is not provided to managers in time Current situation of analysis and provision of fixed asset information: According to the above results, in100% of surveyed enterprises, heads or deputy heads of finance and accounting departments who perform analysis of fixed asset information and are responsible for the results of classification In addition, 22.22% is carried out by the fixed asset accounting department and 27.78% by the estimation department performing the analysis of information related to fixed asset investment The analysis of fixed asset information in the surveyed units mainly showed that most of these units used the net present value method - NPV (33.33%) and the internal rate of return - IRR (27.78%) method to provide information about the effectiveness of the project Other methods such as payback period - PP (11.11%) and profitability index - PI (5.56%) are hardly used to analyze information 2.2.2.2 Current situation of management accounting with the collection, processing, analysis and provision of information for the management and use of fixed assets in Vinacomin’s coal mining enterprises Current situation of fixed asset management: In departments using the fixed assets, enterprises use a lot of fixed assets which have been fully depreciated and have not been numbered for fixed assets The majority of Vinacomin’s coal mining enterprises not have a clear division of responsibility for fixed asset management at the departments using the fixed assets and there is no plan for periodic inspection and maintenance of fixed assets In the accounting department, in fact, only 22.22% of respondents answered that they set up fixed asset tags for each asset, the rest only reflected in the fixed asset book Current situation of selecting fixed asset depreciation policy in Vinacomin’s coal mining enterprises: The number of respondents said that enterprises only used straight-line depreciation method to calculate depreciation for all types of fixed assets is 75/90 (83.33%), 15/90 (16.67%) reported that both straight-line depreciation method and accelerated depreciation method are applied Current situation of assessing investment efficiency, efficiency of using fixed assets in coal mining enterprises of Vinacomin: Most of Vinacomin’s coal mining enterprises have not yet used the assessment of investment efficiency and use of fixed assets In analyzing and evaluating the effectiveness of fixed assets, 16.67% of respondents answered that the units used criteria of production capacity for fixed 17 assets, 11.11% of respondents said that enterprises used criteria of profitability for fixed assets, 11.11% of respondents said that enterprises used profit ratio on assets 2.3 Results of analyzing factors affecting fixed asset accounting at coal mining enterprises in Vinacomin 2.3.1 Internal factors - Firstly, most of the opinions suggested that business scale and characteristics affect the workload of fixed asset accounting; investment process, procurement and management and use of fixed assets in enterprises; the selection of fixed asset depreciation policies and the application of fixed asset management accounting - Secondly, most of the respondents stated that the views and perceptions of enterprise managers affect the issuance of regulations on investment, management and use of fixed assets within enterprises; contructing management accounting reports of fixed assets; decision on increase and decrease of fixed assets - Thirdly, the knowledge and skills of the accountants involved also influence the results of the fixed asset accounting 2.3.2 External factors - Firstly, most respondents (72.22%) believed that the market and competition have an impact on the investment process, procurement of fixed assets of enterprises and application of management accounting technical tools, especially fixed asset management accounting - Secondly, the majority of opinions (94.44%) believed that the accounting legal system affects accounting of fixed assets in coal mining enterprises in Vinacomin - Thirdly, most of the opinions suggested that information technology helps to monitor and manage fixed assets more effectively and better in managing fixed assets 2.4 Assessing the situation of fixed asset accounting at Vinacomin’s coal mining enterprises 2.4.1 Achievements Regarding financial accounting: Coal mining enterprises of Vinacomin have fully used the system of vouchers, accounting accounts and accounting books - Information on fixed assets is presented relatively, appropriately and ensure the legality in financial statements required by VAS 03 and VAS 04 Regarding management accounting: The process of collecting, processing, analyzing and providing information for decisions related to fixed assets is made quite clearly at the investment stages of fixed asset procurement, management and use of fixed assets.The accountants of the enterprises have designed a number of samples of fixed asset management accounting reports The management of fixed assets in enterprises is quite scientifically and strictly implemented 18 2.4.2 Limitations and causes of limitations 2.4.2.1 Limitations * Regarding financial accounting First, limitations in the initial measurement and recognition of fixed assets - The recognition of mineral pre-exploration and mining right costs in Vinacomin’s coal mining companies has not provided transparent information and met the appropriate principles - When incurring environmental recocovery costs, enterprises recorded in production costs (Acc 627) which is considered as not reasonable Secondly, limitations in measuring and recording fixed assets after initial recognition - Currently, Vinacomin’s coal mining enterprises still record fixed assets at their original prices, not including the decline in the value of fixed assets when the fixed assets show signs of decline in value - The majority of coal mining enterprises in Vinacomin are implementing depreciation of fixed assets according to the principle of round month, which is not in accordance with current regulations - Repair costs of fixed assets are always focused by Vinacomin's coal mining enterprises, however many enterprises not make repair plans and not make advance deductions for fixed asset repair costs - In fact, in these enterprises, there are signs that fixed assets are deteriorating in value However, after the initial recognition, fixed assets are still measured and recorded at original cost, enterprises not reflect the real value of fixed assets at the time of preparing financial statements Thirdly, limitations in presenting information in financial statements - Although there are signs of declining value of some fixed assets, enterprises have not reflected the decline in value of fixed assets on financial statements, leading to lower real value of assets at the time of financial statements compared to the value being reflected - Businesses not separate long-term assets held for sale and terminated activities with the fixed assets targets when preparing financial statements * Regarding management accounting In collecting, processing, analyzing and providing information for investment decision making of fixed assets: In the coal mining enterprises of Vinacomin, the content of information that needs to be collected is not clearly defined and the relationship in providing information between departments Therefore, the information fixed asset management accounting has not been provided in time, failing to meet the requirements of the managers in making investment decisions on fixed asset 19 In collecting, processing, analyzing and providing information for the management and use of fixed assets: Many enterprises have not numbered fixed assets and used large amount of fully depreciated fixed assets The straight-line depreciation method application for all types of fixed assets in most of Vinacomin's coal mining companies is unreasonable The reports on fixed asset management accounting are incomplete and most of these enterprises not organize the construction and analysis of the criteria system for evaluating the effectiveness of fixed asset use, only provide detailed information about the equipment situation and changes in fixed assets 2.4.2.2 Reasons for limitations Objective reasons The accounting standard system has many inconsistencies and incompliance between related standards Some transactions occurred but there have not been clearly-instructed accounting standards or instructions Subjective reasons Firstly, due to the inadequate perception of the management about the role of management accounting for fixed assets in assisting decision making and running the business Secondly, the majority of Vinacomin’s coal mining enterprises are large-scale, thus the number and types of fixed assets are very large, and distributed in many places, which causes difficulties in the management, monitoring and recording of fixed assets Thirdly, the record and management of fixed assets has the support of IT like computer software but not yet efficiently Fourthly, the qualification and professional competence of the accounting team in the enterprises is still limited and uneven, and there has been not enough knowledge about fixed asset accounting CONCLUSION OF CHAPTER In chapter 2, the author has presented the study of the situation of managing and using fixed assets; surveying the actual situation of accounting of fixed assets in Vinacomin’s coal mining enterprises in two angles: Financial accounting and management accounting On the basis of analyzing the current status of fixed asset accounting, the author has clarified the results and limitations of fixed asset accounting in coal mining enterprises of Vinacomin Group, reasons for these limitations, which is the basis for proposing solutions in Chapter Research results in chapter can be used by the author in proposing reasonable recommendations for coal mining enterprises in Vinacomin in the current context in Vietnam 20 Chapter SOLUTIONS TO IMPROVR OF FIXED ASSET ACCOUNTING IN COAL MINING ENTERPRISES OF VINACOMIN 3.1 Viewpoints and development objectives of coal industry, coal mining enterprises of Vinacomin and requirements of improving fixed asset accounting in Vinacomin’s coal mining enterprises 3.1.1 Viewpoints and development objectives of coal industry Viewpoints on the development of coal industry To develop the coal industry on the basis of efficiently exploiting, processing and using the country's coal resources; To make a positive contribution to ensuring national energy security; To prioritize to meet domestic demand for coal; to ensure the rational import and export of coal Development objectives of coal industry Building Vietnam's coal industry to become a developed industry; highly competitive; applying advanced technology compared to the region at all stages of coal exploration, exploitation, selecting, processing and use of coal; providing enough coal to meet domestic demand, especially coal for electricity production; reducing the rate of coal mining losses; completing the construction of Quang Ninh exploiting facilities 3.1.2 Viewpoints and objectives of developing coal mining enterprises of Vinacomin Viewpoins of developing coal mining enterprises of Vinacomin Development of Vinacomin’s coal mining enterprises under the motto of sustainable development: Enahancing both mineral resources and human resources; environmentally friendly, adapting to climate change; Harmonious with the locality and community; Establishing mutual beneficial relationshipwith partners and customers Continue to build and complete thermal power plants; promote investment in innovation and modernization of production technology Development objectives of coal mining enterprises of Vinacomin By the end of 2020, to complete the exploration at the level of - 300m for Dong Bac and Nam Thinh coal basin, Tien Hai district, Thai Binh province To ensure that coal mining can meet the demand for domestic coal use, contributing to ensuring national energy security; Attempt to produce 42 million tons of commercial coal by 2020 Expanding international cooperation and aware of the importance to protect and improve the ecological environment in the coal region 3.1.3 Requirements to improve the accounting of fixed assets at coal mining enterprises of Vinacomin In order to complete the accounting of fixed assets in Vinacomin’s coal mining enterprises, it is necessary to ensure the following requirements: Compliance with the accounting law and legal provisions related to fixed assets; ensuring harmony 21 between Vietnamese accounting standards with international practices and international accounting standards; suitable to business operation characteristics and management organization of enterprises; present and provide complete, effective and highly feasible information 3.2 Solutions to complete fixed asset accounting at Vinacomin’s coal mining enterprises 3.2.1 Solutions to improve fixed asset accounting in the perspective of financial accounting 3.2.1.1 Solutions to select the appropriate price calculation basis for fixed assets (1) The period before Vietnam issued accounting standards on "Decreasing value of assets ": Coal mining enterprises of Vinacomin still measureed, recorded initially and post- initial fixed assets at the original price (2) The period after Vietnam promulgates accounting standards on "Decreasing asset value": Accounting departments in Vinacomin’s coal mining companies still measure and record fixed assets at the original price After initial recognition, fixed assets are recorded under the remaning price determined by original cost minus (-) depreciation value and accumulated losses due to the reduction of fixed asset value (if any) 3.2.1.2 Solutions to complete the identification and measurement of specifically-featured fixed assets of coal mining enterprises - Completing the identification, measurement and recognition of coal mining rights: recognizing coal mining rights as intangible fixed assets - Completing the identification, measurement and recognition of mineral exploration costs:on recognition of mineral pre-exploration costs: (1) The period before Vietnam issued accouting standards on "Exploration and evaluation of mineral resources": Enterprises should record mineral exploration costs into production costs of products (2) The period after Vietnam issues accounting standards on "Exploration and assessment of natural resources and minerals": If mineral preexploration costs discover mineral reserves, enterprises should record the intangible fixed assets if they satisfy the requirements of recognition - Completing the identification, measurement and recognition of environmental recovery costs: environmental recovery costs must be recognized as related direct costs and recorded as an increase in the cost of tangible fixed assets 3.2.1.3 Solutions to perfect accounting for repair costs of fixed assets - Planning the costs of fixed asset repair - Estimating the costs of fixed asset repair - Completing accounting of major fixed asset repair costs 3.2.1.4 Solutions to improving the presentation of fixed asset targets in financial statements - Presenting information about long-term assets held for sale and the terminated operation the short-term assets in the financial statements 22 - Presenting information about the value reduction of fixed assets 3.2.2 Solutions to improve fixed asset accounting in the perspective of management accounting 3.2.2.1 Solutions to improve management accounting with the collection, processing, analysis and provision of information for investment decision making of fixed assets - Perfecting the collection of information for making decisions on investment in fixed assets - Completing the processing and analyzing information to make decisions on investment in fixed assets - Completing the management accounting reporting system to make investment decisions on fixed assets 3.2.2.2 Solutions to improve management accounting with the collection, processing, analysis and provision of information for the management and use of fixed assets  Complete management of fixed assets: (1) For businesses that not have the conditions to apply fixed asset management software - Perfecting fixed asset management in the departments using fixed assets: Enterprises need to label each fixed asset, complete the fixed asset - monitoring book form at the place of use and at the same time assign the clear management and use of fixed assets - Completing management of fixed assets at the accounting department: The monitoring and management of fixed assets in terms of value are expressed through the establishment of general tracking accounting books, fixed asset cards and preparing management accounting reports of fixed assets (2) For enterprises with conditions to apply asset management software - At the departments using fixed assets: Each fixed asset is attached with barcode to facilitate the monitoring and management The user department will update the status of fixed assets into the software so that the relevant departments and business executives can obtain the information in a timely manner - At the accounting department: The accountants base on the documents to increase, decrease, repair and upgrade fixed asset to updated into the asset management software  Perfecting fixed asset depreciation accounting: Completing selection of fixed asset depreciation policy; reasonable determination of fixed asset depreciation time; completing the time of extracting and stopping the depreciation of fixed assets  Developing a system of criteria to evaluate investment efficiency and use of fixed assets: Based on characteristics of operation and organization management as well as management requirements of internal enterprises, accountants in Vinacomin’s coal mining enterprises should set up a system of indicators to assess the situation of 23 equipment use and efficiency of using fixed assets 3.3 Conditions for implementing the solutions 3.3.1 On the side of state agencies 3.3.1.1 Ministry of Finance The Ministry of Finance should continue to build and study and issue a number of new accounting standards on "Depreciation of assets value", "Long-term assets held for sale and terminated activities "; "Exploration and assessment of natural resources and minerals" 3.3.1.2 Professional organizations Vietnam Association of Accountants and Auditors, Vietnam Association of Certified Public Accountants need to coordinate with the Ministry of Finance, Big Four auditing companies to strengthen information exchange, experience and enhancing cooperation with regional groups and international occupation organizations, and strengthen research on new accouting standards in general and standards of fixed assets in particular to provide training of knowledge updates for accountants and auditors in the most effective way 3.3.2 For the Group and coal mining enterprises of Vinacomin - Firstly, Vinacomin and coal mining companies need to review, complete and add regulations guiding and implementing uniformly for fixed asset accounting in the Group In addition, the Group needs to promulgate regulations and develop international accouting standard processes in Vinacomin including international accounting standards for fixed assets - Secondly, management needs to raise their awareness about roles, importance and opportunities of management accounting in making decisions related to fixed assets - Thirdly, organize training, professional and fostering knowledge, information technology, update policies, new accounting standards for accountants on a regular basis - Fourthly, improving information technology application in accounting with the aim to improve accounting productivity and provide fixed asset accounting information in a full and timely manner to meet the requirements of information users - Fifth, build a roadmap to implement the proposed solutions CONCLUSION OF CHAPTER On the basis of theoretical research on fixed assets, fixed asset accounting and real situation of fixed asset accounting in Vinacomin’s coal mining enterprises in both angles of financial accounting and management accounting, the thesis has studied and analyzed the requirements of improving fixed asset accounting Thus, the author has 24 proposed solutions to improve the accounting of fixed assets in Vinacomin’s coal mining enterprises according to financial accounting and management accounting aspects At the same time, in order to implement the above solutions, the thesis also provides the conditions and implementation measures for the Ministry of Finance, professional organizations and for Vinacomin as well as coal mining enterprises of Vinacomin CONCLUSION With the identified goals, the thesis has focused on dealing with some problems: - Researching fixed asset accounting according to two viewpoints of original price and re-evaluated price in order to select appropriate price calculation basis for fixed assets in Vietnamese enterprises in general and coal mining enterprises of Vinacomin in particular - - Researching fixed asset accounting according to the two points of view of original price and re-evaluation price, and from the analysis of measurement, recording and presenting information about fixed assets of some typical accounting systems in the world such as the US and China countries, the thesis has drawn some lessons for enterprises in Vietnam as well as coal mining enterprises of Vinacomin in particular The accounting of fixed assets at the original price should be combined with the accounting of the depreciation of fixed assets (if any) At the same time, the mining rights and mineral exploration costs are considered as intangible fixed assets; acknowledging environmental recovery costs are direct costs that constitute the original cost of fixed assets - Through researching and surveying the actual situation of fixed asset accounting in Vinacomin’s coal mining enterprises according to both financial and management accounting perspective, the thesis has objectively evaluated the achieved results, limitations and causes of limitations in fixed asset accounting in these enterprises - Solutions to improve fixed asset accounting in Vinacomin’s coal mining companies including mainly two maor solution groups under the financial and management accounting perspective Despite many attempts, the dissertation cannot avoid shortcomings Therefore, the author hopes to receive contributing ideas and instructions from professors, scientists, researchers to make the thesis more complete LIST OF THE PUBLISHED WORK RELATED TO THE THESIS Dang Thi Hue (2012), 'Solutions to improve production cost accounting and product price at electricity equipment manufacturing JSCs', Journal of Accounting & Auditing, No 9/2012 (108), p.21-22, 28 Dang Thi Hue (2013), 'Experience of organizing accounting activities of cost, revenue and business results in manufacturing enterprises of some countries in the world', Journal of Accounting & Auditing, No + 2/2013 (112 + 113), p.26-28 Dang Thi Hue (2015), ‘Regarding current models of original price and actual cost accounting in Vietnam ', Journal of Accounting & Auditing, No (139), p.19-21 Dang Thi Hue (2016), 'About the fair value model and the situation of reasonable value accounting in Vietnam', Journal of Accounting & Auditing, No (153), p.37-39 Dang Thi Hue (2017), ‘Discussions on long-term asset accounting in Vietnamese enterprises’, Finance ournal, April (655), p.67-68 Dang Thi Hue (2018), ‘Depreciation of fixed assets and impacts on coal mining enterprises' activities, Finance Journal, June (682), p.108-111 ... Vinacomin Vietnam Coal - Mineral Industry Group (formerly known as Vietnam Coal Corporation under Decision No 563 / TTg dated 10/10/1994 of the Prime Minister) with an international transaction name of... accounting of mineral pre-exploration costs Vietnam is in the process of operating the socialist-oriented market mechanism, with open economic policies, attracting foreign investment capital and gradually... international accounting standards are still limited and not yet paid sufficient attention In recent years, the mining industry of Vietnam in general, the coal mining industry in particular has made an important
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