Accounting materials at construction company is a business tracking, cost control, materials as each work item to ensure correct and adequate price. Due to the materials used dispersion in the market, price fluctuations, the accountant should record timely, right audience, right time. The accounting exactly help limit losses and control costs, ensure financial transparency.
Due to the materials used dispersed at many schools, shopping-in-progress and stock from arising in the field, accounting materials in construction is often complicated as well as difficult to control. If not held properly, the business is prone to loss of materials, cost team up and accounting data do not correctly reflect the actual construction.
The article below Lac Viet Computing will help the business system, the entire core content of the accounting of raw materials in building, from the peculiarities, principles recognized method of accounting to the noted practices in the deployment process.
1. Materials of construction include what? What difference with other areas?
1.1. Materials of construction include what?
In construction activities, materials are inputs directly affect the price of progress and financial performance of the work. The classification of the right raw materials to help track the exact cost support, estimation, control, execution and finalization. Accordingly, the raw material in the construction business are usually classified as follows:
- Main material (cement, steel, rock...) directly constituent works, accounts of great value, as well as deciding the quality of construction. Need to track in detail each item to control the risk of crossing the payment or loss. The noted lack of precision will lead to misleading prices, reduce business efficiency and project profitability.
- Filler material (nails, wire tie, additives...) has a small value, but the frequency of use. Loose management easy to cause waste, and “team,” the total cost when the settlement. Better control this group helps business transparency costs, optimize profit for each work.
- Fuel & tools (gasoline, oil, small equipment) need to be accounted attached to each work or ca air due to cost fluctuations-in-progress. The track, which helps businesses accurately assess the performance, operating machinery, from which promptly detect and adjust the case of consumption beyond the level.
1.2 difference between raw building materials & raw materials in commercial business/production
Materials in construction has the characteristics very different:
| Criteria for comparison | Construction business | Business commercial / Production |
| Locations | Scatter in each work sheds, temporary, affected by the weather. | Focus at warehouse fixed conditions storage is standardized and strictly controlled. |
| Rotation process | Often be bought, cumshot, straight to work, at least through the central repository. | Enter the warehouse of finished products/raw materials and then sold or put to the chain. |
| Unit | Complex (tons, m3, block, cover, roll...), difficult to measure the exact amount of conservation of reality (sand, stone). | Homogeneous, easy to tally (a, the, box, kg...). |
| Control wastage | Wastage due to shipping, the actual construction and losses at the market. | Attrition low, located in the technical precision machinery. |
| Object set cost | Track details in each work item or order separately. | Track shipment, commodity code or factory mass production. |
| Calculate unfinished | Materials located on public school is often counted as the cost of uncompleted (621 -> 154). | Material is in stock as inventory (152, 156). |
So, for the organizations and enterprises are to find out information about accounting materials at construction company, understanding the nature each group of materials is the first step to building accounting systems and cost management efficiency and transparency.
2. The role of accounting NVL in construction business
Accounting of raw materials plays a critical role in the system of cost management of construction enterprises, is evident through:
- Control construction costs according to each work category: accounting NVL monitoring process, import, export, and use of materials in each work, each item, thereby helping businesses control costs, compared to the timely payment adjustment when there are signs of cost overruns.
- Provide accurate data to calculate the price of works: information about the raw materials are fully recognize is an important basis for accurate and complete cost of the project, reflecting faithfully the financial performance of each construction project.
- Limiting losses, waste materials in construction: managing supplies have a system to help detect early the difference between accounting data and practical to use, from which minimize risk loss and waste throughout the construction process.
- Ensure documentation serves settlement – audit – inspection: accounting NVL contribute to standardized vouchers related to shopping, used materials and ensure the completeness and validity of the profile, to meet the requirements finalization and audit, as well as inspection according to legal regulations.
Accounting materials does not just stop at the notes as well as reflected data, which is also admin tools is important to help businesses build, cost control, improving the efficiency use of resources and increase financial transparency in the entire life cycle works.
3. Peculiarities of accounting of raw materials at construction company
Accounting materials at construction company has its own characteristics due to the construction activities taking place in the field, prolonged duration influenced directly from the schedule. If not properly identifying the characteristics of this business is very easy to difficulty in cost control, leads to false the cost and risk while settlement construction.
3.1. Peculiarities on locations & form-use supplies
Different from business production or trade, raw materials in the construction business often be used directly in the process, do not focus at a warehouse fixed. The works re-dispersed in many different places, even away from headquarters, making the control of supplies depends on the management at the school, and the coordination between the school with the accounting department.
Besides, another type of materials such as cement, steel, sand stone can be used for many items, or multiple works at the same time, requiring the accountant to track detailed objects used to allocate costs accurately. In fact, if the process of delivery of materials between warehouses, and unclear accounting, business incurred loss, loss or recorded a wrong cost, making accounting data does not reflect the true use of material fact.
3.2. Peculiarities of pricing & supply raw materials
Prices of building materials is constantly fluctuating according to the market under the impact of supply and demand, seasonal and area construction. The same type of materials, but the purchase price can be significant disparities between the time points or between the works in the different, making the control purchase price, as well as collated with the original estimate becomes complex.
Besides, due to the pressure of progress, construction business often have to buy supplies retail or buy fold, reduce the ability to negotiate price as well as extra costs such as shipping, handling, shrinkage fact. If accounting materials at construction company, not the full set of these charges on the value of materials, cost record will not reflect the fact, directly affect the price of works and financial performance of the project.
3.3. Peculiarities of vouchers & time recorded
Stock from raw materials in the construction business mainly arising in the process where management conditions are often not as strict as in the office. Records such as bills, buy supplies, coupons, delivery, acceptance test records often be set up distributed, easily slowly moved about the room, accounting or omission, which causes difficulties for the synthesis and tracking timely.
Besides, the recorded use of materials at the school, sometimes not in sync with the accounting documents, in particular in the business management or use many Excel file discrete. If not, good control of the time recorded, threading vouchers and accounting data to deviations, increase the pressure for accounting when calculating the cost of settlement and auditing works.
4. Principles & methods of accounting of raw materials in construction
In accounting materials at the construction company, the accounting of raw materials not only to reflect the cost accounting but also serve the management objective, price and effective control each work. Therefore, the accountant should comply with the principles noted, at the same time choose the method of accounting in accordance with the peculiarities of construction.
4.1. Accounting principles raw materials according to current regulations
- Compliance with accounting standards and accounting business: The recognition as well as reflecting materials must comply with the accounting standards in Vietnam and accounting regime existing business. All import, export, survival supplies, all need to have valid documents, are accounted the correct account, the correct accounting period in accordance with the organization and production of the construction business.
- Principles recorded the original price of raw materials: Raw materials are recorded at cost, including the actual purchase price together with the costs directly related to bringing supplies of locations used as transportation, unloading, storage. For supplies bought straight out works, whole reasonable costs incurred need to be the full set to accurately reflect the cost of materials of construction.
- Principles of fit between cost, revenue works: the Cost of raw materials must be recorded in accordance with the revenue of each work item for execution. The allocation of costs need to keep abreast of the volume taken to avoid accrued expense is not correct or not true objects, causing wrong prices affect trading results.
4.2. The method of calculating the price of stock downloads
- Method weighted average: this Method of valuation of stock based on the average prices of the supplies the first viable and materials imported in usa. The advantage is the simplicity of materials, stable fit with business there are many times imported materials with price fluctuations are not too large. However, in the context of price building supplies volatility, this method can reduce the level of closely reflects the real cost at each time point.
- The method first in – first out (FIFO): Under FIFO method, materials, warehousing ago will be used first. This method helps to value inventory end of period asymptotic current market price reflects cost of supplies with practical use at work. The downside is requires detailed tracking of each batch of materials, pressure management if the business is construction of many of the parallel.
- Reviews in actual construction: The choice of the method of calculating the price of stock should be based on the peculiarities of construction, the level of fluctuations in the prices of supplies and capacity management of the accounting department. Business building large-scale management in construction projects often priority FIFO to serve analyze price accuracy. Conversely, businesses, large/small can apply a weighted average to optimal resource accounting.
5. Guide accounting import – export – inventory of materials at the construction site
5.1 accounting buy supplies taken straight out works
In fact, building many types of supplies are bought and shipped straight out works without passing through the central repository. This case, if you are still recorded by the warehouse will do more procedures and do not reflect the lines of the actual cost.
When materials purchased directly used for construction, accounting recorded in production costs unfinished business of that works:
- Debt TK 154 – production Costs unfinished business (in each work, for example: A)
- Have TK 111, 112–, Cash, bank deposits
- Or Have TK 331 – Must be paid by the seller (if unpaid)
How accounting helps business recorded cost timely, with the actual construction, while reducing the pressure on inventory management focus. In terms of management, it is important to track the total cost incurred by each work right from the start, limit the cumulative expenses at the end of that false report.
5.2 accounting as on each item construction
For supplies used from the central warehouse or warehouse temporarily to serve the business need to gather detailed cost by each work item or the construction phase. Accounting made:
- Debt TK 154 – production Costs unfinished business (under construction/item)
- Have TK 152 – Raw materials
In the case of supplies used directly for completed items and business organizations to track the cost of raw materials, direct clear, can be accounted for:
- Debt TK 621 – the Cost of raw materials directly
- Have TK 152 – Raw materials
Accounting details by category to help businesses build control the consumption of materials, comparison between plan and actual construction. This is very important data to evaluate the effectiveness of each item, timely detection of any reasonable as consumption exceeds the losses, or construction organization is not optimal.
5.3 tracking inventory and supplies in each work
In addition to central warehouse, business construction often arise warehouse temporarily or inventory of supplies right at work. Keeping track of inventory at the point of this is required to ensure the accurate data and limit the risk of loss. Accountants need to organize, track, private inventory investment in each of the works or warehouse temporarily:
When importing materials into the warehouse, temporary or works:
- Debt TK 152 – Raw materials (details according to the public works/warehouse temporarily)
When used for construction:
- Debt TK 154 or 621 – Cost constructions / cost of raw materials directly
- Have TK 152 – Raw materials
The case of the transfer of materials between the works, the accountant noted:
- Debt TK 152 – works get
- Have TK 152 – works shipping
Collated periodic data inventory between books and reality in the works to help businesses detect early disparity, good control of material dispersion and improve transparency while settlement construction or working with agency check.
6. The difficulty enterprises often encounter when doing accounting construction materials
In fact, accounting materials at construction company is complex array due directly related to the construction, warehouse and many parts coordination. If not well controlled, errors in the material can deflect costs, price, and the influence financial transparency.
6.1. Losses supplies – false data
A difficulty common is the enterprise does not control the material fact in the process. The raw material is usually the dispersion, used in construction progress as well as be influenced by human factors. When the process input – output supplies mainly based on papers or reports slow, accounting elusive is the amount of supplies used actual versus plan.
As a consequence, data warehouse, accounting data do not match. Inventory on the books can be far different inventory practice at work, resulting in deviations in cost, difficult to determine responsibility, as well as potential risks and losses. In the long term, this situation reduces the reliability of accounting data, affect the governance and audit.
6.2. Hard to control costs – the cost of works
Many businesses have difficulty in the dissection cost of supplies under each project or category of construction. When supplies are purchased common, used not according to clear levels, or not attached with each object specific cost accounting can only set the cost in the aggregate.
This makes business difficult to determine the cause, the price: due to the loss of supplies, due to design changes, due to increased purchase prices or due to construction management has not yet effective. The lack of detailed data, make the leader board there is no basis to evaluate the effectiveness of each work, at the same time limiting the ability to improve the price in the next project.
6.3. Pressure-settlement – audit work
Phase determination, the audit works often create pressure for the accounting department building. One of the main causes is the lack of valid documents or vouchers, incomplete, heterogeneous between accounting and parts construction.
Besides that, the raw material is general slow, much depends on reporting manual have incurred errors when the projector. These problems not only extend the time of settlement, but also increases the risk of type, cost, directly affect the financial results of the business.
7. Accnet ERP – accounting Solution for comprehensive construction company
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- Materials management according to each work item: the System allows the tracking details import – export – inventory of materials attached directly to each work, each item of construction. Thanks to that, the business control is consumption material fact than planned, limit losses, proactive, timely adjustment.
- Track expenses and supplies in real time: the Cost of raw materials is constantly updated as soon as they arise, professional help in the accounting department and leaders to grasp quickly the situation cost in each work. Timely data is important to control prices, as well as evaluate the effectiveness of construction.
- Contact information of data between accounting – construction – project management: Accnet ERP data connection through between the parts, reduce the status of discrete information or duplicate. The contact information this help accounting work on the same data source with parts construction, as well as project management, thereby improving the accuracy, consistency of the data.
- Standardized vouchers reduce the risk of errors when settlement: the System supports standardized process for setting up as well as store stock from the accounting data is fully organized, clear, easy to access. This contributes to reduce errors in the process of synthesis, at the same time create a solid foundation for the settlement – audit work.
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Accounting materials at construction company not only professional recognized at cost, which is the administration tool key help control price, limit losses, improve efficiency, each works. Understanding the characteristics, organization, process accounting consistency helps enterprises proactively ago fluctuations in cost, and pressure and settlement. When the data for the raw materials strict management transparent, timely, businesses have a solid foundation for decision-making accuracy and sustainable development in the long term.
