Management Accounting of revenue, costs and business results in power companies in the North of Vietnam

of electricity companies in the North of Vietnam is the distribution and trading of electricity. 6. Research method Data collection - Secondary data: 5 (1) Data of current situation of the electricity distribution segment of the enterprises, the website of Vietnam Electricity: www.evn.com.vn, The Northern Power Corporation: www.evnnpc.com.vn, Hanoi Electricity Corporation: https://evnhanoi.vn and websites of Electricity units under EVN NPC and EVN HaNoi. (2) Research of domestic and foreign authors at www.siencedirect.com, www.google.scholar.com and the doctoral dissertations and scientific articles have been published published related to the research issue. (3) Expert analysis reports on social media. (4) Data about accounting ledges, reports and documents of electricity companies during the period from 2017 to 2020. - Primary data: To achieve the thesis research objectives, the author collects information on the reliaty of management accounting of revenue, expenses and business results in the electricity companies in the Northen in Vietnam. Primary data obtained by the author using 03 methods are survey method by questionnaire, interview method, and observation method. 7. New contributions of this research Theoretical contributions: The research systematized and clarified some issues about the nature and role of the management accounting of revenue, costs and business results in the implementation of managerial functions including planning, implementing, controlling, decision-making. Practical contributions: On the basis of survey and data analysis, the research evaluated the management accounting situation of revenue, expenses and business results in the distribution and retail phase of electricity serving in the 6 implementation of the managerial function at 45 electricity enterprises. The study provided an overall picture of the current state of management accounting of revenue, costs and business results in the distribution and retail business of electricity in Vietnam. Recommendations and solutions: The thesis recommended to complete the management accounting of revenue, expenses and business results in the implementation of the managerial function comprising planning, implementing, controlling, evaluating, and decision-making in electricity distribution and retail phase in Vietnam. The solutions are aimed at meeting the needs of using accounting information for stakeholders. 6. The structure of the research Exclude introduction, conclusion, list of acronyms, list of references, appendices, the structure of the research includes 3 chapters. Chapter 1. Framework of management accounting of revenue, expenses and business results in the enterprise. Chapter 2. The results of management accounting of revenue, expenses and business results in Electricity companies in the North of Vietnam. Chapter 3. The recommendation to complete management accounting of revenue, expenses and business results in electricity companies in the North of Vietnam. 7 CHAPTER 1: FRAMEWORK OF MANAGEMENT ACOUNTING OF REVENUE, COSTS AND BUSINESS RESULTS IN THE ENTERPRISE 1.1. Overview on management accounting of revenue, cost and business results in the enterprise 1.1.1. The nature of management accounting of revenue, costs and business results in enterprise By researching and synthesizing, the research finds that the viewpoints and concepts of the previous authors have the same common points. Therefore, the author thinks that these common points are also the deep-rooted nature of the management accounting including: (1) The management accounting is a part of the accounting system of the organization; (2) The management accounting has the full nature of accounting; (3) Information provided by the management accounting is the basis for managers to perform managerial functions in enterprises. 1.1.2. The roles of management accounting of revenue, costs and business results in the implementation of managerial functions in the enterprise Information of management accounting plays a key role and dominates all business operations of firms. It is an important basis for making short-term and long-term decisions (Nguyen Ngoc Quang, 2012). All the basic functions of business management revolve around the issue of "decision-making". To perform well in managerial functions, administrators must have the necessary information in order to make the right decisions (Doan Xuan Tien, 2009). Management accounting of revenue, costs and business results is a part of management accounting in the enterprise. To help the administrator make right decisions, the information provided by management accounting of revenue, costs and 8 business results is necessary. The basic managerial functions comprise planning, implementing; controlling and evaluating, and decision-making. 1.2. Contents of management accounting of revenue, costs and business results in relationship with managerial functions 1.2.1. Management accounting of revenue, expenses and business results serving the planning function The planning function is the first of the four basic managerial functions. This is one of the key functions in the management process and is related to the implementation of other managerial functions. Planning function is to orient the firm to develop in operational (short-term) and in strategy (long-term). Set up norms and standard costing Setting up norms and standard costing is the basis for management accounting department build budget system. To develop a scientific standard costing system, the cost norming department needs to collect information based on the guidelines for setting the norms of the related departments. Besides, it is required that the norm builders have specialized knowledge and practical experience based on the methods and techniques. - Method of statistical experience - Method of economic and technical analysis Set up revenue, costs and business results budget The annual budget system includes segment budget which are detailed for each department, each product or service, and each period to form the overall estimate of the enterprise (Nguyen Ngoc Quang, 2012). Production and business budget include all kinds of estimates such as revenue budget, direct material cost budget, direct labor cost budget, overhead cost budget, finished good budget, cost of sales budget, business administration budget, and business results budget. Budgeting provides managers information 9 about production and business plans in each specific time and the whole process (Dang Ngoc Hung, 2013). 1.2.2. Management accounting of revenue, costs and business results serving the implementation function 1.2.2.1. Collect initial data about revenue, costs and business results Initial information acquisition is the first stage of the entire international economic process. International economic information about revenue, expenses and business results to organize and receive is past information and future information. 1.2.2.2. Systemize, process and provide information of management accounting of revenue, costs and business results The next step of the management accounting process after receiving initial information about revenue, costs and business results is to systemize, process and provide information. The thesis researches using management accounting methods to systematize and process accounting information about revenue, cost and business results to serve the functions including: Identifying and classifying expenses, revenue, business results, applying accounting and bookkeeping methods. Information provision is the final stage in the accounting cycle that includes a managerial reports system: a revenue and cost management report and a business results report. 1.2.3. Management accounting of revenue, expenses and business results to serve the of controlling and evaluating function To serve the controlling and evaluating function, firms need to develop responsibility accounting. This is a widely popular model today, proven to bring high efficiency to the enterprise. According to Kellogg (1962); Antle and Demski (1988) responsibility accounting must have a close relationship with control. Responsibility accounting divides the organization into parts 10 according to each specific function, assign specific tasks to each part and clearly decentralize management to all divisions in the organization. The responsibilities of managers in reducing each item of revenue and expenses need to be clear and specific. Responsibility accounting needs to evaluate the performance of each department where they control (Antle & Demski 1988). Accordingly, there is a lot of research (Lin & Yu, 2002); (Correa- Ruiz & Moneva-Abadía, 2011); Nguyen Ngoc Quang (2012); Nguyen Thi Minh Phuong (2013); Nguyen Thi Thanh Loan et al (2018) pointed out that there are centers of responsibility such as cost center, revenue center, profit center and investment center. 1.2.4. Management accounting of revenue, costs and business results serving decision-making functions Decision-making is an important function, throughout all stages of corporate governance, from planning, implementation, and evaluation (Doan Xuan Tien, 2009). Based on the information provided by the management accounting from collecting, processing and analyzing information throughout the process of planning, implementing, controlling information, managers make decisions in the enterprise. 1.2.5. Managemettn accounting for revenue, costs and business results in the ERP environment Many businesses today have applied technology to overall business management in the 4.0 era management trend, namely the application of ERP systems. 1.3. Factor affecting the management accounting of revenue, costs, and business results in the enterprise 1.3.1. Internal factors Based on the literature review of the factors affecting the implementation of management accounting, there are basically 11 three groups of internal factors that affect the management accounting of revenue, costs and business results. These include (1) firm size, (2) Knowledge and perception of managers, (3) Qualifications of management accounting staff. 1.3.2. External factors External factors affecting the management accounting of revenue, costs and business results include (1) supporting factors, (2) Competitivenes of business environment. Conclusion of chapter 1 12 CHAPTER 2: THE RESULTS OF MANAGEMENT ACCOUNTING OF REVENUE, COSTS AND BUSINESS RESULTS IN POWER COMPANIES IN THE NORTH OF VIETNAM 2.1. Overview of Vietnam Power companies 2.1.1 Overview of Vietnam's Electricity Industry Electricity distribution activities are related to the provision of electricity distribution to users, including: Investment in development of the distribution grid; management, operation, maintenance, repair, and troubleshooting of the distribution grid; management of meters and equipment after the meter, communication activities, customer care related to electricity distribution. Electricity distribution activities and in charge of electricity retail business are activities related to electricity trading. 2.1.2. The development of power companies in the North of Vietnam Vietnam Electricity (EVN) currently has 3 power generation corporations GENCO 1,2,3 and 8 hydro/thermal power companies in the field of electricity production. And five power corporations trading electricity to the customers are Northern Power Corporation, Central Power Corporation, Southern Power Corporation, Hanoi Electricity Corporation, Ho Chi Minh Power Corporation. In which, Northern Vietnam includes: Northern Electricity Corporation and Hanoi Electricity Corporation. 2.1.3. Organizational and managerial structure characteristics of the Corporation and the companies under the Northern Electricity of Vietnam 2.1.3.1. Organizational and managerial structure characteristics of the Northern Power Corporation 13 Parent company - Northern Electricity Corporation (hereinafter referred to as EVN NPC) is a one-member limited liability company with 100% charter capital owned by Vietnam Electricity. EVN NPC manages, distributes and does business with an area of 145,244 km2 (accounting for 43.85%), population 46.58 million/89 million people (accounting for 52.33%). The rate of the population with the national grid is 96.1%, the number of communes with the national grid is 98.5%, the number of districts with the national grid is 100%. 2.1.3.2. Organizational and managerial characteristics of Hanoi Electricity Corporation With the organizational structure and management model, electricity trading activities in the Northern Power Corporations are generally divided into four levels of management: Chairman of the Board cum General director, deputy general director level, departmental level and Electricity companies. 2.1.3.3. Managerial structure characteristics of companies under the Hanoi Electricity Corporation and the Northern Power Corporation The dependent units of the Corporation are the production and business units and business auxiliary units including the Power Companies of the province/district/district, other companies, the center and the project management board. These units have the functions of direct and auxiliary tasks of electricity production and business, a number of other business lines under the management decentralization of the corporation; is responsible for managing, using and exploiting capital, assets and other resources assigned by the corporation. 2.1.4. Functions and duties of power companies in the North of Vietnam 14 GC directors, deputy directors, departments, regional power management teams 2.1.5. The characteristics of electricity production and business activities affecting management accounting of revenue, costs and business results at power companies in the North of Vietnam Trading in electricity is not like trading other commodities. To sell electricity to customers, power companies have to bring electricity to consumers through the distribution grid system. For that reason, the power distribution grid system has to spread across the country. With this feature, the management of customers as well as the management of the low voltage grid becomes extremely complicated, depending on the topography and specific conditions of each residential area. To ensure safe supply of electricity to customers who buy electricity, promptly solve problems arising in the process of electricity supply and use, and at the same time be able to strictly manage the electricity sale business. For EVN HANOI, decentralized management to 30 electricity companies in the inner/suburban district, below are the regional electricity management teams to deal directly with electricity users. EVN NPC decentralizes management to 24 affiliated units, 03 one- member limited liability companies, and below are regional power management teams for direct transactions with electricity users. With rapid load growth and the supply from the National grid at times not meeting enough electricity demand, EVN HANOI and EVN NPC have repeatedly cut loads. That has affected the commercial electricity output and electricity sales of the corporation, leading to the impact of electricity business profits. 2.2. The results of management accounting of revenue, cost and results in the Power Companies in the North of Vietnam 2.2.1. Management accounting of revenue, cost and business results for the planning function 2.2.1.1. Cost management accounting serving the planning function 15 - Setting up standard costing in the stage of power distribution Distribution grid is a part of an electrical network including lines and power stations with voltage up to 110kV. Specifically, the nominal voltage levels in the power distribution system include 110kV, 35kV, 15kV, 10kV, 0.6kV and 0.4kV. - Setting up standard for sales and business administration costs Through the process of surveying at power units, in addition to the construction of cost norms for service in the management of the distribution grid, at the power units asked 100% to build the inter- cost norm. over the sales process, management cost norms for each team, department, and district in the electricity retail business. - Actual situation of planning sales and administration costs budgets Through the field survey, 100% of power companies affiliated to EVN NPC and EVN HaNoi build up a budget of selling expenses related to electricity saving propaganda and customer care costs, no costs budget related to sales accounting and business administration. The sales and administration costs budgets is estimated by B05 to build and integrate in the ERP system for district-level units to apply. This integration helps the administration department get relevant information because it has been stored on the ERP system. This is the estimate that is generally guided by the corporation for implementing units to suit the unit. - Situation of building standarnd costing at electricity retail stage The author found that Northern Power Companies did not set up standard costing related to purchasing electricity from the Corporation. In order to calculate and build the cost of purchasing electricity, also known as the cost of electricity that the power company buys from the corporation, then the power company needs to develop a plan for electricity consumption in the following 16 year. This plan is sent to the corporation by the electricity planning department (B02) of the units. Based on the output of the commercial plan, the Corporation will set up the internal electricity selling price for distribution power companies. 2.2.1.2. management accounting of revenue and business results serving the planning function - Actual situation of electricity retail sales budget - Actual situation of electricity retail business results budget 2.2.2. Reliaty of management accounting of revenue, cost and business results for implementation function 2.2.2.1. Reality of getting initial information about accounting, management of revenue, expenses and business results Hoan Kiem Electricity, Cau Giay Power, Dan Phuong Power, Son Tay Electricity, Nam Dinh Electricity, Ninh Binh Electricity collected, recorded and updated past and future information into the ERP system. The ERP system at B05 accounting department includes modules: CM manager (Cash accountant), GL manager (General Accountant), AP manager (Payable Accounting), AR manager (Accounts Receivable Accounting). PM manager (Project Accountant), FA manager (Fixed Asset Accounting, Tooling Tools), TA manager (Tax Accountant), INV manager (Inventory Accounting). Updating the ERP system helped the managers to fully access and retrieve information quickly and simply. 2.2.2.2. Reality of systematizing, processing and providing management accounting information about revenue, costs and business results (i) Current status of systematizing and processing accounting and management information on revenue, expenses and business results (ii) The reality of providing management accounting information about revenue, expenses and business results 17 The results at the power companies of Phu Tho, Thanh Hoa, Thai Binh, Tuyen Quang, Nghe An, Ninh Binh, Hai Duong, Cau Giay, Me Linh, etc. showed that all companies must comply with the regulations issued by the Corporation in Document No.3793/EVN-TCKT dated September 15th, 2015. Accounting department based on the form issued by EVN to organize the accounting books and reports. The financial report forms and the management report forms complied with the forms issued in Document No. 3793/EVN-TCKT dated September 15th, 2015. 2.2.3. Management accounting of revenue, cost and business results for control and evaluation function By survey at the Electric Power companies Hoan Kiem, Ba Dinh, Dong Da, Tu Liem, Ha Dong, Dan Phuong, Bac Tu Liem, Nam Dinh, Ninh Binh, Ha Nam, Thai Nguyen, Tuyen Quang, Cao Bang, etc., the results showed that 100% of the distribution power companies control revenue, costs and business results through actual documents at their offices and affiliated units. Quarterly and annually, a comparison between the budget and actual assigned by the corporation will be made. The provision of information to serve the control and evaluation function by assessing variance and evaluating the effect of the factors to revenues, costs and business results. 2.2.4. Management accounting of revenue, cost and business results for the decision-making function + Make long-term decisions for the construction of power stations, power lines, high voltage stations, transformer stations, transformers ... related to the distribution of electricity + Make decisions by analyzing cost-volume-profit 2.3. Factors affecting management accounting of revenues, costs and business results in Power companies in the North of Vietnam 2.3.1. Internal factor 18 - Firm size - Knowledge and perceition of managers - Qualifications of management accounting staff 2.3.2. External factors - Supporting factors - Competitiveness of business environment 2.4. Assessment of management accounting of revenue, cost and business results in the Power companies in the North of Vietnam 2.4.1. The achievements Firstly, management accounting of revenue, expenses and business results for the planning function Second, management accounting of revenue, expenses and business results for the implementation function Third, management accounting of revenue, expenses and business results for controll and evaluation functions Fourth, management accounting of revenue, expense and business results management for decision-making functions Fifth, management accounting of revenue, expenses and business results in the ERP application environment 2.4.2. Limitations and causes leading to limitations on management accounting of revenue, expense and business results in Northern Vietnam Power companies 2.4.2.1. Limitations Firstly, management accounting of revenue, expenses and business results for the planning function Second, management accounting of revenue, expenses and business results for the organization and implementation function Third, management accounting of revenue, expenses and business results for testing and evaluation functions 19 Fourth, management accounting of revenue, expense and business results management for decision-making functions Fifth, management accounting of revenue, expenses and business results in the ERP system application environment 2.4.2.2. Causes (1) External causes Management accounting is shown in the Accounting Law 2003 and Circular 53/2006/TT-BTC guiding the implementation of the international economy in enterprises. The standardization of international economic methods has not been specifically guided in detail, making the process of providing and analyzing information for managers still based on the methods of financial accounting. On the side of the Ministry of Industry and Trade and the Electricity companies: It is necessary to strongly promote and implement drastically the deployment of separate distribution and retailing of electricity. On the side of the Ministry of Finance: Currently, there are no legal documents on international economy that are required for businesses to apply. This imperative is to promote the capacity of human accountants in the business to have a deeper understanding of international economics. (2) Internal cause The qualification of accounting staff in power companies, though having the advantage of being well-trained and strong in financial accounting, has not yet been trained. The application and understanding of information technology, ERP system of the accounting department in particular and the departments in general have not been proficient and properly trained. Conclusion of chapter 2 20 CHAPTER 3: RECOMMENDATIONS TO COMPLETE MANAGEMENT ACCOUNTING OF REVENUE, COSTS AND BUSINESS RESULTS IN POWER COMPANIES IN THE NORTH OF VIETNAM 3.1. Objectives, orientation and strategy for developing the electricity industry 3.1.1. Objectives for developing the electriciy industry The overall goal is: Mobilizing all do