Double Entry For Hrdf Claimable
In Malaysia, the Human Resources Development Fund (HRDF) supports employers in training and upskilling their workforce through claimable programs. When a company participates in a HRDF-claimable training, it’s important to reflect these transactions accurately in the accounting records. Understanding the double entry for HRDF claimable expenses helps ensure compliance and financial clarity. Proper accounting treatment also helps organizations track their reimbursements and recognize income appropriately. This topic explains how to record such transactions using simple accounting principles and highlights key considerations for businesses claiming HRDF training expenses.
What Is HRDF Claimable Training?
HRDF claimable training refers to courses or programs that employers can reclaim from the Human Resources Development Corporation (HRD Corp) if they are registered under the HRDF scheme. Employers contribute a levy, and in return, they can claim back expenses incurred on approved employee training programs. These claims must follow specific procedures and are usually reimbursed after the training has taken place and proper documentation is submitted.
Eligible Expenses for Claims
- Training fees paid to registered training providers
- Meal and travel allowances for trainees (in some cases)
- Accommodation expenses (if applicable)
- Other direct training-related costs
Each expense type needs to be properly tracked and supported with receipts or invoices to ensure successful claims.
Accounting for HRDF Claimable Training
When an organization incurs training expenses that are HRDF claimable, it must initially record the expense as usual. Then, once the reimbursement is approved or expected, a receivable is created to reflect the amount due from HRDF. When the claim is eventually received, this receivable is cleared. Let’s break down the double entries involved at each step.
Step 1: When Training Expense Is Incurred
Assume the company pays RM3,000 to a registered training provider for a course eligible under HRDF.
Double entry:
- Debit: Training Expense (P&L) – RM3,000
- Credit: Bank/Cash (Asset) – RM3,000
This entry records the cost of the training in the company’s profit and loss statement, and shows the reduction in the bank account used to make the payment.
Step 2: When Claim Is Submitted to HRDF
Once the claim is submitted, the company can recognize a receivable for the amount expected to be reimbursed.
Double entry:
- Debit: HRDF Receivable (Asset) – RM3,000
- Credit: Training Expense (P&L) – RM3,000
This effectively reverses the expense initially recognized and moves it to a receivable. This step is optional, depending on company policy. Some companies prefer to wait until the claim is approved to recognize the receivable.
Alternative Step 2: Recognizing Receivable Upon Approval
If the company prefers a more conservative approach, it waits until HRDF has approved the claim.
Double entry (upon approval):
- Debit: HRDF Receivable – RM3,000
- Credit: Other Income (or HRDF Reimbursement Income) – RM3,000
In this approach, the training expense remains in the profit and loss account, while the reimbursement is treated as income separately. This method provides a clearer view of training expenses and any government reimbursements received.
Step 3: When Reimbursement Is Received
Once HRDF transfers the funds, the receivable is cleared from the books.
Double entry:
- Debit: Bank – RM3,000
- Credit: HRDF Receivable – RM3,000
This records the cash inflow and clears the amount due from HRDF on the balance sheet.
Choosing the Right Accounting Treatment
The accounting treatment depends on your organization’s financial reporting preferences and how you wish to represent government assistance in your statements. Both methods offsetting the training expense or showing HRDF income separately are acceptable if applied consistently and transparently.
Comparison of Treatment Methods
| Method | Effect on P&L | Best For |
|---|---|---|
| Offsetting Expense | Reduces training cost | Simple internal reporting |
| Recognizing Separate Income | Shows gross expense and income | Detailed financial reporting |
Public companies or firms with external stakeholders may prefer to show HRDF reimbursements as income for better transparency.
Other Considerations
Documentation Is Crucial
For successful HRDF claims, companies must keep detailed records:
- Official invoices from training providers
- Payment receipts
- Attendance records
- Approval letters from HRD Corp
- Claim submission confirmation
Accounting staff should coordinate closely with HR and training departments to collect these documents for audit purposes and ensure proper entries.
When Claims Are Partially Approved
Sometimes, HRDF may not approve the full amount submitted. In such cases, the accounting entries must be adjusted:
- If only RM2,000 is reimbursed out of RM3,000 claimed:
- Debit: Bank – RM2,000
- Credit: HRDF Receivable – RM2,000
- Write off the remaining RM1,000 from receivables
Alternatively, the unapproved amount may be charged back to training expenses, depending on how the initial entry was recorded.
HRDF Levy Contributions
In addition to claimable reimbursements, companies must also account for monthly HRDF levy contributions. These are usually 1% of the monthly payroll and are mandatory for companies with more than 10 employees in specified industries.
Double entry for levy contribution:
- Debit: HRDF Levy Expense – RMX
- Credit: Bank – RMX
This is separate from claimable training expenses but is often recorded in the same reporting cycle to keep training costs and related levies in view.
Understanding the double entry for HRDF claimable training helps ensure accurate financial reporting and accountability. Whether you choose to offset expenses or record HRDF claims as income, the key is to apply the method consistently. Ensure clear documentation, timely submission of claims, and communication between departments. By keeping proper accounting records, businesses can maximize HRDF benefits while maintaining transparent and compliant financial statements. As HRDF continues to support skill development, proper bookkeeping ensures that the company’s financial health remains as strong as its human capital investment.