THE MINISTRY OF FINANCE
Circular No. 05/2019/TT-BTC dated January 25, 2019 of the Ministry Of Financeon accounting instructions for microfinance institutions
Pursuant to the Law on Accounting No. 88/2015/QH13 dated November 20, 2015;
Pursuant to the Law on Credit Institutions No. 47/2010/QH12 dated June 16, 2010;
Pursuant to the Law on Amendments and Supplements to the Law on Credit Institutions No. 17/2017/QH14 dated November 20, 2017;
Pursuant to the Government’s Decree No.174/2016/ND-CP dated December 30, 2016 elaborating certain articles of the Law on Accounting;
Pursuant to the Government’s Decree No. 93/2017/ND-CP dated August 7, 2017 prescribing the financial regime for credit institution or foreign bank branches and the financial supervision and assessment of the efficiency of investment of state capital in wholly state-owned or state-invested credit institutions;
Pursuant to the Government s Decree No. 87/2017/ND-CP dated July 26, 2017 defining the functions, tasks, powers and organizational structure of the Ministry of Finance;
Upon the request of the Director of Accounting and Audit Management and Supervision Department,
The Minister of Finance hereby promulgates the Circular providing accounting instructions for microfinance institutions.
Chapter I
GENERAL PROVISIONS
Article 1. Scope of regulation
This Circular shall set out regulations on the system of bookkeeping accounts, financial statements and accounting books used by microfinance institutions.
Article 2. Subjects of application
Entities governed by this Circular shall be microfinance institutions that are established, organized and operated under laws on credit institutions.
Chapter II
SYSTEM OF BOOKKEEPING ACCOUNTS
Article 3. Bookkeeping accounts
1. Microfinance institutions shall consistently use bookkeeping accounts listed in the Chart of Bookkeeping Accounts in the Appendix No. 01 hereto.
2. In order to meet administrative requirements, the State Bank of Vietnam (hereinafter referred to as SBV) shall decide on tier-2 and tier-3 accounts which can be used after receipt of the written consent from the Ministry of Finance.
3. In case where SBV needs to supplement or modify tier-1 accounts in terms of names, codes and contents of their entries in order to record particular economic transactions, the written consent from the Ministry of Finance must be sought.
4. Microfinance institutions may create and use accounts listed in the Chart of Bookkeeping Accounts only if these accounts conform to the accounting regime and have contents consistent with business activities specified in their licenses.
5. Microfinance institutions may create tier-4, tier-5 accounts and subaccounts that are in conformity with accounting administration requirements and are relevant to contents, components and principles of general bookkeeping accounts that are adopted by the Ministry of Finance and SBV.
6. This Circular shall only provide instructions about accounting principles, components and entries of economic transactions of bookkeeping accounts.
7. The system of bookkeeping accounts applicable to microfinance institutions shall be divided into 08 types of bookkeeping accounts:
- Assets accounts: From Account 101 – Account 391.
- Liabilities accounts: From Account 415 to Account 491.
- Payments account: Account 519.
- Equity accounts: From Account 601 to Account 691.
- Revenue accounts: From Account 701 to Account 791.
- Expenses accounts: From Account 801 to Account 891.
- Accounts linked to determination of business results: Account 001.
- Off-balance sheet accounts: From Account 901 to Account 999.
Article 4. Account 101 - Cash
1. Accounting principles
a. This account reflects the collection, spending and stockpile of cash available at microfinance institutions. Only the actual amount of inward, outward and residual cash.
b. When recording inward or outward cash, it shall be necessary to the note of cash payment or receipt, or the note of receipt or payment and cheque, etc. and provide all signatures required by the Law on Accounting.
c. The cashier must assume responsibility for creating the cashbook, keeping a record of receipt, spending, inward and outward cash on a daily and continuous manner and in order, and calculating the residual amount of cash.
d. Other cash put up as collateral and deposited by other entities and persons at microfinance institutions must be managed and accounted for as cash assets of a microfinance institution.
dd. The cashier shall be responsible for managing and recording the inflow and outflow of cash. On a periodic basis, the cashier must check the residual amount of cash, compare data on the cashbook and the cash accounting book. If there is any variation between these data, the accountant and cashier must double-check data to identify causes and give recommended actions to be taken to deal with such variation.
e. The accountant must keep a detailed record of cash denominated in the base currency. With respect to foreign currency transactions and reassessment of accounts derived from foreign currencies on the date of preparation of a financial statement, the accountant shall have to convert foreign currency into Vietnamese dong in accordance with applicable laws on credit institutions.
2. Components and contents of this account
Debit side:
- Received cash sums;
- Residual cash discovered after checking and inventorying cash;
- Exchange differences determined after re-assessment of foreign currency balances on the reporting date (in case where the foreign exchange rate is increased as against Vietnamese dong).
Credit side:
- Outward cash sums;
- Deficit cash sums discovered after checking and inventorying cash;
- Exchange differences determined due to reassessment of reported foreign currency balances (if the foreign exchange rate is decreased as against Vietnamese dong).
Balances on the Debit side:
Residual cash sums determined on the reporting date.
Article 5. Account 110 – Deposits at the State Bank
1. Accounting principles
a. This Account shall be used for recording a microfinance institution’s deposit amounts at the State Bank.
b. Recording of entries in this Account shall be regulated as follows:
- Bases for recording entries into this account shall include the notice of Credit, Debit or the bank account statement of SBV, enclosing original evidencing documents.
- Upon receipt of evidencing documents from SBV, the accountant must make comparison with attached original documents. In case where there is any difference between data available in the accounting book of a microfinance institution or data available in original evidencing documents and those available on evidencing documents of the SBV, it shall be obligatory to inform the SBV to make comparison and then verify and deal with such difference in a timely manner.
2. Components and contents of this account
Debit side:
Deposits at the SBV.
Credit side:
Withdrawn deposits.
Balances on the Debit side:
This entry reflects deposit amounts at the SBV on the reporting date.
Article 6. Account 121 – Investments
1. Accounting principles
a. This Account is intended for recording the existing amounts of, increases or decreases in investments that a microfinance institution is allowed to make in accordance with regulations set out in the applicable financial regime. Microfinance institutions shall not be allowed to use this account in the absence of relevant legislative regulations.
b. The accountant must make a detailed journal of investments held to maturity over periods of time, items, base currencies and amounts, etc.
c. Microfinance institutions must keep a full and timely record of operating income generated from investments such as deposit interest, bond interest, profits and losses arising from the disposal and liquidation of investments.
d. If provisions for losses incurred from doubtful debts are set off against investments in accordance with law, the accountant must assess the likelihood of recovering these debts. In case where it is definitely established that part or all of investments may be unrecoverable, the accountant must record losses as financial expenses arising within an accounting period. In case these losses are not determined in a reliable manner, the accountant may not record any decrease in these investments, but must give an explanatory notes on the financial statement about the investment recovery likelihood.
2. Components and contents of this account
Debit side:
Value of increased investments.
Credit side:
Value of decreased investments.
Balances on the Debit side:
The value of investments existing on the reporting date.
Article 7. Account 130 – Deposits at credit institutions
1. Accounting principles
a. This Account shall be used for recording a microfinance institution’s deposit amounts at domestic credit institutions.
b. Bases for recording entries into this account shall include the notice of Credit, Debit or the account statement issued by a credit institution, enclosing original evidencing documents.
c. Upon receipt of evidencing documents from credit institutions, the accountant must make comparison with attached original documents. In case where there is any difference between data available in the accounting book of a microfinance institution or data available in original evidencing documents and those available on evidencing documents of credit institutions, it shall be obligatory to inform credit institutions to make comparison and then verify and deal with such difference in a timely manner.
2. Components and contents of this account
Debit side:
- Deposit amounts at domestic credit institutions;
- Exchange differences increased owing to revaluation of foreign currency balances at the reporting date.
Credit side:
- Withdrawn deposits;
- Exchange differences decreased owing to revaluation of foreign currency balances at the reporting date.
Balances on the Debit side:
Microfinance institution’s total deposits made at domestic credit institutions on the reporting date.
Article 8. Account 201 – Lending
1. Accounting principles
a. This account shall be used for reflecting funds that microfinance institutions lend to borrowing customers.
b. This account shall not reflect loans derived from entrusted funding sources.
c. Microfinance institutions shall have to keep a detailed journal of loans specific to lending contracts or agreements, terms, maturity dates, borrowers and paid amounts, etc.
d. Microfinance institutions must comply with applicable regulations set out in laws on lending operations of microfinance institutions, including those on lenders, lending term and property put up as collateral for loans, etc.
2. Components and contents of this account
Debit side:
Amounts lent to borrowing customers.
Credit side:
Principal collected from borrowing customers.
Balances on the Debit side:
The remaining amount of loan principal owed by borrowing customers at the end of the reporting period.
Article 9. Account 251 – Lending by using entrusted funds
1. Accounting principles
a. This account shall be used for reflecting the amounts that microfinance institutions lend to domestic business entities or persons to serve predetermined purposes by using entrusted funds of the Government, domestic and foreign organizations and individuals.
b. Microfinance institutions shall have to keep a detailed journal of loans specific to lending contracts or agreements, terms, maturity dates, borrowers and paid amounts, etc.
c. Microfinance institutions must comply with applicable regulations set out in laws on lending operations of microfinance institutions, including those on lenders, lending term and property put up as collateral for loans, etc.
2. Components and contents of this account
Debit side:
Amounts lent to borrowing customers.
Credit side:
Principal collected from borrowing customers.
Balances on the Debit side:
The remaining amount of loan principal owed by borrowing customers at the end of the reporting period.
Article 10. Account 281 – Debts awaiting resolution
1. Accounting principles
a. This account shall be used for reflecting debts waiting for being dealt with, including debts secured by pledges or liens; debts secured by mortgaged property related to pending lawsuits; secured or unsecured debts accrued.
b. Microfinance institutions shall have to keep a detailed journal of debts specific to borrowing customers and lending terms, etc.
c. Microfinance institutions shall move debts under surveillance at the account 201 and 251 to this account for continued surveillance while they are awaiting solution.
2. Components and contents of this account
Debit side:
- Unrecovered principal amounts awaiting resolution;
- Adjustment in the difference in which the selling price of property collected as debt repayment is greater than the debt that a borrower has to pay if such debt is secured by a pledge or lien.
Credit side:
- Principal amounts disposed of under the legal decision issued by a competent regulatory authority;
- Accrued principal amounts already disposed of;
- Secured principal amounts disposed of under law;
- Proceeds from disposal of pledged or pawned property that are collected by microfinance institutions (based on the actual amounts collected by selling pledged or pawned property);
- Adjustment in the difference in which the selling price of property received as a pledge or lien for a debt is less than total debt that a borrower has to repay (a risk compensation provided after selling pledged or pawned property).
Balances on the Debit side: Total loan principal awaiting resolution at the end of period.
Article 11. Account 291 – Written-off debts
1. Accounting principles
a. This account shall be used for recording a microfinance institution’s delinquent loans of which writing off is accepted without having to pay interest whilst awaiting resolution.
b. Microfinance institutions shall have to record detailed entries in this account for each borrowing customer whose loan is written off.
2. Components and contents of this account
Debit side:
Loan principal already written off.
Credit side:
- Amounts receivable from debt repayments of borrowing customers.
- Loan debts of which resolution is accepted.
Balances on the Debit side:
Total loan principal amounts already written off at the reporting period.
Article 12. Account 299 – Loan loss provisions
1. Accounting principles
a. This account shall be used for recording a microfinance institution’s setting aside funds for provisions against and treatment of loan-borne risks.
b. In order to deal with losses incurred by potential risks arising from lending operations and control fluctuations in business results during an accounting period, microfinance institutions shall have the burden of setting aside funds for provisions against losses of loans which are accounted for as expenses.
c. Setting aside of funds for, reversal of provisions against loan-associated losses and remitting of debts hardly recoverable (bad debts) must be subject to laws in force. Setting aside of funds for or reversal of provisions against loan-borne losses shall be carry out at the date of preparation of a financial statement.
2. Components and contents of this account
Debit side:
- Using provisions for dealing with credit risk.
- Posting an entry recording the reversal of the surplus of provisions already created in accordance with regulations in force.
Credit side:
Already created provisions charged as expenses.
Balances on the Credit side:
Total loan loss provisions existing at the end of an accounting period.
Article 13. Account 301 - Tangible fixed assets
1. Accounting principles
a. This account shall be designed for recording the existing value, increase or decrease of all tangible fixed assets of a microfinance institution according to their historical costs.
b. Recording entries in this account must adhere to the Vietnamese Accounting Standard No. 03 – Tangible fixed assets. Management, use and depreciation of fixed assets shall conform to the financial regulations adopted by the Ministry of Finance.
c. Accountants shall be obliged to keep track of specific tangible fixed assets by using subaccounts.
2. Components and contents of this account
Debit side:
- Recording increased historical costs of tangible fixed assets that are formed by capital construction projects of which commissioning is completed, purchases, acceptance of contributed capital, allocation, or that are gifted or donated, or derived from surplus ones;
- Historical costs of fixed assets that are increased owing to construction, retrofit or alteration or improvement of existing ones;
- Historical costs of fixed assets increased owing to revaluation.
Credit side:
- Historical costs of fixed assets decreased owing to intracompany transfers, disposal and liquidation or use of such assets as capital contributions to entering into joint ventures, etc.
- Historical costs of fixed assets decreased due to uninstallation of the entire unit or certain components of an asset;
- Historical costs of fixed assets decreased owing to revaluation.
Balances on the Debit side: Total historical cost of existing tangible fixed assets of a microfinance institution at the end of an accounting period.
Article 14. Account 302 - Intangible fixed assets
1. Accounting principles
a. This account shall be designed for recording the existing value, increase or decrease of all tangible fixed assets of a microfinance institution according to their historical costs.
b. Recording entries in this account must adhere to the Vietnamese Accounting Standard No. 04 – Intangible fixed assets. Management, use and depreciation of fixed assets shall conform to the financial regulations adopted by the Ministry of Finance.
c. Accountants shall be obliged to keep track of specific intangible fixed assets by using subaccounts.
2. Components and contents of this account
Debit side:
Increased historical costs of intangible fixed assets.
Credit side:
Decreased historical costs of intangible fixed assets.
Balances on the Debit side:
Total historical cost of intangible
Article 15. Account 303 – Fixed assets hired under finance leases
1. Accounting principles
a. This account shall be designed for recording the existing value, increase or decrease of all fixed assets that a microfinance institution hires under finance leases according to their historical costs.
b. Recording entries in this account must adhere to the Vietnamese Accounting Standard No. 06 – Renting of fixed assets.
c. Accountants shall be obliged to keep track of specific fixed assets hired under finance leases by using subaccounts.
2. Components and contents of this account
Debit side:
Increased historical costs of fixed assets hired under finance leases.
Credit side:
Decreased historical costs of fixed assets under finance leases that have been returned to lessors upon contractual expiry dates or bought back as fixed assets of a microfinance institution.
Balances on the Debit side:
Total historical cost of fixed assets under finance leases that exist at a microfinance institution on the reporting day.
Article 16. Account 305 – Fixed asset depreciation
1. Accounting principles
a. This account shall deal with the increase or decrease in the depreciation or cumulative depreciation value of fixed assets during their useful life owing to fixed asset and other depreciations.
b. In principle, all fixed assets of a microfinance institution involved in business operations (even including assets not yet put to use, unnecessary for use and awaiting liquidation) must be depreciated according to applicable regulations. Depreciation on fixed assets used in business operations shall be accounted for as operating expenses within an accounting period; depreciation on fixed assets not yet put to use, unnecessary for use and awaiting liquidation shall be recorded as other expenses. In special cases where depreciation is not required, microfinance institutions shall have to comply with applicable laws. In cases where fixed assets are used for operating projects or welfare purposes, their depreciation shall not be accounted for as operating expenses but as depreciation of fixed assets, and shall be recorded as a decrease in funding for formation of these assets.
c. Based on regulations of laws and administrative requirements of a microfinance institution, accountants may decide on a depreciation method in compliance with legislative regulations which is appropriate for each fixed asset in order to boost business operations, ensure the fast and full recovery of capital and relevance to the capability of covering costs of a microfinance institution.
The depreciation method applied to each fixed asset must be consistent and may be changed whenever there is any significant change in the method of recovery of economic interests of a fixed asset.
d. The depreciation period and the fixed asset depreciation method must be reassessed at least the end of each fiscal year. If the estimated useful life of an asset has a vast difference from the previously estimated one, the depreciation period must be changed accordingly. The fixed asset depreciation method may be changed whenever there is any significant change in the method of estimation of recoverability of economic interests from a fixed asset. If this case happens, adjustments in depreciation costs in the current and subsequent years shall be required, and must be explained in a financial statement.
dd. If a fixed asset has been fully depreciated (fully recovered), but is still in use in business operations, depreciation on such asset shall not be continued. In contrast, if a fixed asset not yet fully depreciated (fully recovered) has been damaged or needs to be liquidated, it shall be mandatory to determine causes of that situation and responsibilities of the collective or individual for the purpose of charging compensations and claiming the remaining value of the asset not yet recovered, and if any compensation is not made, use proceeds from liquidation of such asset as compensations of which the amounts are subject to the decision granted by the microfinance institution’s leadership.
e. As for intangible fixed assets, depending on their useful timelength, depreciation thereof may begin from the date of commencement of their use (specified in a contract, a commitment or a decision of a competent authority). As for intangible fixed assets which are rights to use land, depreciation on these rights shall be allowed only if the period of use thereof is determined. In case such period is not determined for any reason, depreciation on these assets shall not be allowed.
g. As for fixed assets hired under finance leases during their useful life, lessees must charge depreciation on these assets within the contractual period as expenses or security for the full recovery of capital.
2. Components and contents of this account
Debit side:
Depreciated value of fixed assets decreased due to liquidation, disposal or transfer thereof to other business entities or use of them as capital contributions to other business entities.
Credit side:
Depreciated value of fixed assets increased due to depreciation of these assets.
Balances on the Credit side:
Accumulated depreciation of fixed assets existing at the end of an accounting period.
Article 17. Account 311 – Tools and instruments
1. Accounting principles
a. This account shall be intended for reflecting the existing value of, the increases and decreases in, tools and instruments of microfinance institutions.
b. Accountants record receipt, dispatch and storage of tools and instruments in the Account 311 according to their historical costs. Principles of determination of historical costs of received tools and instruments shall be subject to regulations set out in the accounting standard of “Inventories”.
c. Accountants must record receipt, dispatch and storage of tools and instruments based on their actual value.
d. Tools and instruments of small value that are taken out of storage facilities for business uses must be recorded in full in administrative expenses.
dd. In case where tools, instruments and packing in circulation, or articles for rent, are dispatched for consumption or for business leasing purposes in multiple accounting periods, they shall be recorded in the Account 381 “Other assets” and shall be gradually charged to expenses within an accounting period.
2. Components and contents of this account
Debit side:
- Book value of tools and instruments received from procurement outsourcing, self-production, toll manufacturing or acquisition of contributed capital;
- Value of tools and instruments that are received back at warehouses following the rental period;
- Book value of surplus tools and instruments discovered after the stocktaking is completed.
Credit side:
- Book value of tools and instruments dispatched for uses in business, renting or capital contribution activities;
- Trade discounts obtained upon purchase of tools and instruments;
- Value of tools and instruments returned to or discounted by sellers;
- Value of missing tools and instruments discovered after the stocktaking is completed.
Balances on the Debit side: Book value of tools and instruments remaining in warehouses at the end of an accounting period.
Article 18. Account 313 – Raw materials
1. Accounting principles
a. This account shall be designed for reflecting the existing value of, the increases and decreases in, raw materials of microfinance institutions.
b. Accountants must record receipt, dispatch and stocking in warehouses of raw materials in the Account 313 in conformance to the cost principle laid down in the accounting standard of “Inventories”.
c. Accountants must record receipt, dispatch and storage of tools and instruments based on their actual value.
d. Recording of raw materials that are not under a microfinance institution s ownership, including those kept in the custody of other safekeeping service providers, etc., shall not be allowed.
2. Components and contents of this account
Debit side:
- Book value of raw materials received in warehouses;
- Value of excess raw materials found after stocktaking.
Credit side:
- Book value of raw materials dispatched from warehouses for business uses;
- Value of raw materials returned to or discounted by sellers;
- Trade discounts obtained from purchase of raw materials;
- Value of lost or damaged raw materials found after stocktaking.
Balances on the Debit side:
Book value of raw materials remaining in warehouses at end of an accounting period.
Article 19. Account 321 – Capital work in progress
1. Accounting principles
a. This account shall be designed for reflecting expenditures on implementing capital construction projects (including costs of purchase of fixed assets, new construction, repair, renovation, expansion or technical refurbishment of works) and the financial finalization of capital construction projects. This account shall only be used during the capital construction period for keeping record of materials, tools and equipment intended for capital construction activities.
b. Expenditures on implementing capital construction projects (capital construction expenditures) are defined as total costs necessary for new construction, repair, renovation, expansion or technical refurbishment of works. Capital construction expenditures shall be determined based on workload, set of economic-technical norms and criteria and state policies, must address objective market elements over periods of time and must be implemented according to regulations on capital construction management. Capital construction expenditures shall include:
- Construction cost;
- Equipment cost;
- Compensation, support and resettlement cost;
- Project management cost;
- Investment and construction consulting cost;
- Others.
The Account 321 may contain details of works or project items, each of which must record entries of contents of capital construction expenditures which are posted in a cumulative manner from the date of commencement to the date of completion, commissioning and transfer for use.
c. As for projects already completed and brought into operation, if final accounts of costs incurred in these projects have not been approved yet, microfinance institutions may record increases in historical costs of fixed assets at estimated prices (an estimated price must be based on an actual cost that a microfinance institution has to pay to acquire a fixed asset) in order to calculate depreciation on these assets, but must adjust such historical costs to those specified on the approved final accounts.
d. Costs incurred from repair, servicing and maintenance of normal operations of fixed assets shall be directly charged to business expenses within the accounting period. As for fixed assets that must be repaired, serviced or maintained periodically in conformance to technical requirements, accountants may set aside funds for provisions against accounts payable and charge them in advance to business expenses in order to cover costs of any repair or maintenance activities that may arise.
dd. In case investment projects are terminated, microfinance institutions must carry out the liquidation and recover costs already arising in these projects. The difference between actual costs and proceeds from such liquidation must be recorded as other expenses or may be recovered after determination of compensating responsibilities of involved organizations and individuals.
2. Components and contents of this account
Debit side:
- Costs of investment in capital construction, procurement and major overhaul of fixed assets (including tangible and intangible fixed assets);
- Costs of renovation and improvement of fixed assets;
- Costs arising after the initial recording of fixed assets.
Credit side:
- Value of fixed assets formed by capital construction and acquisition, and already completed and brought into operation;
- Value of eliminated projects and costs of approval of other eliminated projects which is carried forward once the financial finalization of a project is approved;
- Value of major overhauls of fixed assets already completed and carried forward once the financial finalization of each overhaul is approved;
- Carry-forward of costs incurred immediately after the initial recording of fixed assets in relevant accounts.
Balances on the Debit side:
- Total costs of investment projects for construction and major overhaul of fixed assets in progress at end of an accounting period;
- Value of investment projects for construction and major overhaul of fixed assets at end of an accounting period which have already been completed but not yet to be transferred or brought into operation, or of which the financial finalization has not been approved yet.
Article 20. Account 351 – Receivables
1. Accounting principles
a. This account shall be designed for reflecting monetary amounts that other entities outside of microfinance institutions owe to microfinance institutions.
b. Microfinance institutions must keep a detailed record of each debtor and debt amount.
c. In details of this account, accountants must classify debts, types of debts likely to be repaid by due dates, doubtful debts or debts that may be unrecoverable in order to have grounds for determining the amounts set aside for provisions against hardly collectible receivables or taking measures to deal with non-collectible receivables.
2. Components and contents of this account
Debit side:
Receivables that may arise from outside.
Credit side:
Amounts receivable from the outside that have already been collected.
Balances on the Debit side:
Total amounts that need to be collected from outside at the end of an accounting period.
This account may have balances on the Credit side. Balances on the Credit side reflect the sums received in advance or the sums already collected which are greater than the receivables (in special cases and in details of specific receivables).
Article 21. Account 353 – Deductible VAT
1. Accounting principles
a. This account shall be used for reflecting the allowable input VAT deduction, the deducted input VAT, and the input VAT deduction to be allowed, of microfinance institutions.
b. Accountants shall be required to keep separate records of the allowable input VAT deduction and the non-allowable input VAT deduction. In case where it is impossible to do so, the input VAT amount shall be recorded in the Account 353. At the end of an accounting period, accountants must determine the allowable input VAT deduction and the non-allowable input VAT deduction in accordance with laws on VAT.
c. The non-allowable input VAT deduction shall be charged to value of purchased assets or expenses, as the case may be.
d. The determination of the allowable input VAT deduction, preparation of tax returns, tax finalization and payment must comply with laws on VAT.
2. Components and contents of this account
Debit side:
Allowable input VAT deduction.
Credit side:
- Deducted input VAT;
- Carry-forward of non-deductible input VAT;
- Input VAT on goods that are purchased but returned or discounted;
- Input VAT refunds.
Balances on the Debit side:
The remaining amount of input VAT deductions to be allowed, input VAT refunds allowed but not yet paid by the State Budget.
Article 22. Account 359 – Provisions against loss of receivables
1. Accounting principles
a. This account shall be designed for reflecting the setting aside of funds for provisions against loss of receivables of microfinance institutions.
b. Upon preparation of financial statements, microfinance institutions shall have to determine doubtful debts in order to set aside funds for or reverse provisions against loss of receivables.
c. Microfinance institutions must set provisions against loss of receivables in compliance with regulations on the applicable financial regime.
d. The setting side of funds for or reversal of provisions against loss of receivables must occur at the financial reporting date.
- In case where a provision against loss of receivables that is set at the end of an accounting period is greater than the one specified in the accounting book, the positive difference shall be recorded as an increase in provisions and administrative expenses.
- In case where a provision against loss of receivables that is set at the end of an accounting period is less than the one specified in the accounting book, the negative difference shall be recorded as a decrease in provisions and administrative expenses.
2. Components and contents of this account
Debit side:
- Using provisions for dealing with risks arising from receivables.
- Reversing the surplus provisions already created in accordance with regulations in force.
Credit side:
Already created provisions charged as expenses within an accounting period.
Balances on the Credit side:
Reflecting total provisions existing at end of an accounting period.
Article 23. Account 362 – Other receivables
1. Accounting principles
This account shall be used for making latest updates on payments of debts that have to be recovered, including: advance payments or other receivables, e.g. The deficient value of assets found without causes and awaiting resolution; receivables related to material compensations for loss or damage of raw materials, goods or capital, etc. through fault of individuals or collectives according to the decision on compensation; spending of which the compulsory recovery is not accepted by a competent authority; payments that need to be recovered; deposits, pawns and pledges; receivables other than those mentioned above.
2. Components and contents of this account
Debit side:
- Value of advances;
- Deficient value of assets awaiting resolution;
- Value of property put up as mortgages, pawns or deposits or pledges;
- Receivables of individuals or collectives with respect to the deficiency in assets of which causes are clarified and which is handled according to the written document stating prompt actions.
- Third-party payments that have to be recovered;
- Other receivables.
Credit side:
- Carry-forward of the deficient value to corresponding accounts under the decision specified in the written document stating prompt actions;
- Value of pledges or deposits or pawns already received back or paid;
- Amounts collected from other receivables;
- Advances already collected.
Balances on the Debit side:
Other receivables not yet collected at end of an accounting period.
This account may have balances on the Credit side. The balances on the Credit side reflect the already collected amounts greater than the amounts receivable.
Article 24. Account 366 – Project spending
1. Accounting principles
a. This account shall be designed for reflecting money spent on projects in order to carry out economic, political and social duties assigned by the State or a sponsor to microfinance institutions and serve not-for-profit purposes of microfinance institutions. Project expenditures shall be covered by funds for projects allocated by the State Budget, non-refundable grants or aids.
b. Microfinance institutions must create accounting books recording details of project expenditures arranged by specific funding sources or accounting years, etc.
c. Accounting for project expenditures must ensure uniformity with the preparation of cost estimate, matching and consistency of data available in accounting books and financial statements.
2. Components and contents of this account
Debit side:
Actual project expenditures.
Credit side:
- Expenditures on projects in violation of regulations that are not approved and must be charged off and recovered;
- Expenditures on projects with the approved final accounts of costs.
Balances on the Debit side:
Expenditures on projects without final accounts or with final accounts approved at the reporting period.
Article 25. Account 381 – Other assets
1. Accounting principles
a. This account shall be designed for reflecting other assets of microfinance institutions, including: Prepaid expenses that are defined as actual costs already arising but related to business results in different accounting periods; other assets of microfinance institutions that have not yet been reflected in other accounts.
b. Contents of prepaid expenses, including:
- Prepaid expenses related to infrastructure leases and fixed asset operating leases (e.g. rights to use land, workshops, warehouses, storage yards, offices, stores and others) for the purpose of performing business activities in multiple accounting periods;
- Expenses for purchase of insurance policies (e.g. fire and explosion insurance, insurance for civil liabilities of vehicle owners and fees paid in a one-off manner for insurance policies by microfinance institutions in multiple accounting periods;
- Tools, instruments and packing in circulation, articles for rent related to business operations in multiple accounting periods;
- Expenses for repair of fixed assets arising one time of great value of which costs of the major overhauls are not paid in advance by microfinance institutions, and distributed for not more than 3 years;
- Expenses for disposal of assets put up as collateral for debts;
- Other prepaid expenses for business operations in multiple accounting periods;
- Assets other than the abovementioned.
c. Calculation and distribution of prepaid expenses into expenses arising over accounting periods must be based on the nature and amount of each expense so that the proper method and criteria are selected.
d. Accountants must keep a detailed record of prepaid expenses over prepayment periods that have already arisen and been distributed to cost-bearing subjects in corresponding accounting periods, and the remaining amount of prepaid expenses which have not yet been distributed to expenses.
2. Components and contents of this account
Debit side:
- Prepaid expenses arising within an accounting period;
- Expenses for disposal of assets put up as collateral for debts;
- Other assets of microfinance institutions.
Credit side:
- Prepaid expenses charged into expenses arising within an accounting period;
- Proceeds from recovery of costs incurred from disposal of property put up as security for payment of debts;
- Other assets of microfinance institutions that have already been resolved.
Balances on the Debit side:
- Prepaid expenses not yet to be charged into business expenses arising within an accounting period;
- Expenses for disposal of assets put up as collateral for debts not yet to be recovered;
- Value of other assets of microfinance institutions at end of an accounting period.
Article 26. Account 382 – Lending entrustment
1. Accounting principles
a. This account shall be designed for reflecting amounts that microfinance institutions transfer to trustees in order for them to extend credit to borrowing customers under terms and conditions of signed entrustment agreements.
b. Microfinance institutions must use subaccounts for keeping record of specific trustees and types of entrustment for credit extension.
2. Components and contents of this account
Debit side:
Amounts that microfinance institutions entrust as loans.
Credit side:
Amounts that trustees pay under contracts.
Balances on the Debit side:
The remaining amounts entrusted as loans at the end of an accounting period.
Article 27. Account 391 – Interest and fees receivable
1. Accounting principles
a. This account shall be intended for reflecting interest and fee amounts that microfinance institutions have to collect, including:
- Interest on deposits that microfinance institutions make at the State Bank and other credit institutions;
- Interest on loans and fees for credit and service operations that must be collected;
- Interest and fees for loan entrustments that must be collected;
- Interest and fees for other operations that must be collected.
b. Interest receivable shall be recorded on the basis of time length and actual interest rates over periods of time.
c. Fees receivable may be recorded on the basis of time length and the actual fee amounts over periods of time.
d. Interest and fees receivable must represent the accrued interest amounts that microfinance institutions have charged to revenues but have not yet been paid.
2. Components and contents of this account
Debit side:
Interest and fee amounts receivable that are accrued.
Credit side:
Interest and fee amounts receivable that have already been paid.
Balances on the Debit side:
Reflecting the remaining interest and fee amounts that microfinance institutions must collect at the end of an accounting period.
Article 28. Account 415 – Borrowing of funds from persons, credit institutions or other organizations
1. Accounting principles
a. This account shall be designed for reflecting amounts that microfinance institutions borrow from persons, credit institutions or other organizations.
b. Microfinance institutions must use subaccounts for keeping record of details of specific borrowed funds classified by borrowing terms and lenders, etc.
2. Components and contents of this account
Debit side:
- Loan debts that microfinance institutions have already repaid;
- Negative difference that may occur owing to revaluation of the foreign currency balance at end of an accounting period.
Credit side:
- Amounts that microfinance institutions borrow from persons, credit institutions or other organizations;
-Positive difference that may occur owing to revaluation of the foreign currency balance at end of an accounting period.
Balances on the Credit side:
Reflecting amounts that microfinance institutions are borrowing from persons, credit institutions or other organizations at end of an accounting period.
Article 29. Account 420 – Customer’s deposits
1. Accounting principles
a. This account shall be used for reflecting amounts deposited at microfinance institutions, including compulsory savings and voluntary savings of microfinance institutions and other customers.
b. Microfinance institutions shall have to keep a detailed journal of deposits classified by customers and deposit terms, etc.
2. Components and contents of this account
Debit side:
Withdrawn amounts.
Credit side:
- Deposited amounts.
- Interest added to principal of customers.
Balances on the Credit side:
Reflecting amounts deposited at microfinance institutions at end of an accounting period.
Article 30. Account 441 – Entrusted loans
1. Accounting principles
a. This account shall be designed for reflecting funds that are entrusted as loans to microfinance institutions by the Government, domestic and overseas organizations and persons for specified purposes, and that these microfinance institutions are charged with repay upon maturity.
b. Microfinance institutions shall have to use subaccounts to record types of funds lent by specific entrustors.
2. Components and contents of this account
Debit side:
- Lending fund amounts repaid to entrustors.
- Negative difference that may occur owing to revaluation of the foreign currency balance at end of an accounting period.
Credit side:
- Amounts entrusted by partners to microfinance institutions.
- Positive difference that may occur owing to revaluation of the foreign currency balance at end of an accounting period.
Balances on the Credit side:
Total amount of loans entrusted from microfinance institution’s partners at the end of an accounting period.
Article 31. Account 451 – Payables outside microfinance institutions
1. Accounting principles
a. This account shall be designed for reflecting monetary amounts that microfinance institutions owe to other entities outside of microfinance institutions. b. Details of specific amounts that microfinance institutions have to pay sellers, providers and bidders winning capital construction contracts shall need to be recorded. In addition to details about amounts payable, this account must reflect the amounts paid in advance to sellers, providers and bidders winning capital construction contracts for goods and services that have not yet been rendered.
c. This account shall not be constituted by entries recording purchases of tools, instruments and services from the outside, etc. that are paid immediately (e.g. in cash, cheque or by wire transfer).
d. Detailed subaccounts shall be used for recording specific entities or persons involved in payment relationships.
2. Components and contents of this account
Debit side:
Amounts already paid to providers.
Credit side:
Amounts payable.
Balances on the Credit side:
Reflecting the remaining amounts to be paid at end of an accounting period.
This account may have balances on the Debit side. Balances on the Debit side shall reflect the amounts at end of an accounting period.
Article 32. Account 453 – Taxes and payables to the State
1. Accounting principles
a. This account shall be designed for reflecting taxes, fees, charges and other amounts that need to be paid, have already been paid and will have to pay by microfinance institutions in the State Budget in an accounting year.
b. Microfinance institutions shall actively calculate, determine and declare taxes, fees, charges and other payables to the State as prescribed by laws; record taxes that need to be paid, have already been paid, are deductible or are refunded, etc. on time
c. In nature, indirect taxes such as VAT, environment protection tax and others shall be deemed as third-party collectibles. Therefore, indirect taxes must be deleted from the database of gross sales in financial statements or other reports.
d. As for deductible or refundable tax amounts, accountants must make clear difference between those already paid upon purchase or those that need to be paid upon sale of goods or rendering of services.
dd. Accountants must keep a detailed journal of taxes, fees, charges and amounts that need to be paid, have already been paid and will have to be paid.
2. Components and contents of this account
Debit side:
- VAT amounts that are deducted within an accounting period;
- Taxes, fees, charges and amounts that need to be paid, have already been paid and will have to be paid to the State Budget;
- Tax amounts reduced from tax amounts payable.
Credit side:
Taxes, fees, charges and other amounts that need to be paid to the State Budget.
Balances on the Credit side:
Taxes, fees, charges and other amounts that will have to be paid to the State Budget at end of an accounting period.
In particular cases, the Account 453 may have balances on the Debit side. Balances on the Debit side (if any) recorded in the Account 453 must reflect tax amounts and amounts already paid which are greater than tax amounts and amounts payable to the State, or may reflect already paid tax amounts obtaining tax exemption, reduction or reimbursement which has not yet been carried out.
Article 33. Account 461 – Payables to employees
1. Accounting principles
This account shall be intended for reflecting amounts that microfinance institutions have to pay and payments of these amounts to their employees, including salaries, wages, bonuses, social insurance benefits and others classified as employee s income.
2. Components and contents of this account
Debit side:
- Amounts of salaries, wages, salary-associated bonuses, social insurance coverage and others that have been paid, spent and advanced to employees;
- Amounts withheld from salaries and wages of employees.
Credit side: Amounts of salaries, wages, salary-associated bonuses, social insurance coverage and others that need to be paid and spent to employees.
Balances on the Credit side: Amounts of salaries, wages, salary-associated bonuses and others that will have to be paid to employees at end of an accounting period.
In particular cases, the Account 461 may have balances on the Debit side. Balances on the Debit side shall reflect the already paid amount greater than the amount payable, including salaries, wages, bonuses and others.
Article 34. Account 462 – Other payables
1. Accounting principles
a. This account shall be designed for reflecting the current conditions of payment of other payables, including:
- Value of surplus assets existing without clear causes and awaiting the asset disposal decision issued by the competent unit; value of surplus assets payable to persons and collectives under the decision of the competent unit specified in the written document stating disposal of such assets if causes for existence of such assets are determined;
- Retained amounts and payments for social insurance, health insurance, unemployment insurance contributions and contributions to trade union budgets;
- Amounts retained from salaries of staff members (if any);
- Amounts in custody under regulations in force and amounts awaiting payment and resolution that entities and units deposit with microfinance institutions to receive their safekeeping service;
- Unearned revenues and incomes.
- Amounts that have to be paid to underwrite voluntary retirement insurance policies, life insurance policies and other (non-salary) allowances for employees, etc.
- Amounts and assets put up as security deposits or collateral and expenses that have to be paid for goods and services received from sellers or services provided within an accounting period but, in fact, have not yet been paid owing to the absence of invoices, accounting materials and documents, shall be recorded in operating expenses in the accounting period;
- Other payables.
2. Components and contents of this account
Debit side:
- Carry-forward of the surplus value to corresponding accounts under the decision specified in the written document stating actions;
- Trade union budget spending at microfinance institutions;
- Amounts of Si, HI, UI contributions and union dues paid to SI, HI, UI and trade union budget authorities;
- Unearned revenues charged in each accounting period; reimbursement of advances to customers in case of termination of leasing of assets;
- Reimbursement of received security pledges or deposits;
- Actual payments charged into expenses payable;
- Positive difference in which expenses payable are greater than actual expenses recorded as expense reductions;
- Other amounts payable.
Credit side:
- Value of surplus assets awaiting disposal (without clear causes); value of surplus assets payable to individuals or collectives under the decision specified in the written document stating disposal of such assets if causes for existence of such assets are immediately determined;
- Charging SI, HI, UI and union dues into business expenses or withholding them from salaries paid to staff members;
- Payments for accommodation rentals, electricity and water bills to staff members who live in collective houses;
- Union budget that is overspent and supplemented;
- SI benefits paid to staff members if these benefits are paid by social insurance agencies;
- Unearned revenues arising at end of an accounting period;
- Other entrusted collectibles that must be repaid;
- Received pledges and collateral.
- Payable expenses estimated in advance and recorded as operating expenses;
- Other amounts payable.
Balances on the Credit side:
Reflecting remaining amounts payable at end of an accounting period.
This account may have balances on the Debit side. Balances on the Debit side shall reflect the already paid amounts greater than the amounts payable at end of an accounting period.
Article 35. Account 466 – Project funding sources
1. Accounting principles
a. This account shall be designed for reflecting the receipt, use and preparation of the final account of funds for implementation of projects of microfinance institutions.
Project finances are defined as direct grants or aids from the Government, domestic and overseas organizations or individuals that are used for funding implementation of approved target programs and projects with the aim of fulfilling economic, political and social duties for non-business purposes. Project finances must be used in conformance to the approved estimate and must be recorded in the final account submitted to the financing entity.
b. Project finances relevant to specific funding sources must be accounted for in a detailed manner. Simultaneously, accounting for funding sources for implementation of projects in the present year and those in the previous year must be detailed and separate.
c. Project finances must be used according to specified purposes, business tasks, standards, norms and within the limits specified in the approved estimate.
d. At the end of a fiscal year, microfinance institutions must carry out registration for the final account assessing the current conditions of the receipt and use of project finances with financial institutions, supervisory bodies and financing entities. The amount of project finances that have not been used up shall be handled under the decision of the competent unit. Microfinance institutions shall be allowed to carry forward the remaining amount of project finances only in case of receiving approval from the competent entity or unit.
dd. At the end of a fiscal year, if the final account of operating expenditures funded by project finances is not approved, accountants shall carry forward project finances in the present year to those in the previous year.
2. Components and contents of this account
Debit side:
- Amounts of expenditures funded by project finances of which settlement has been approved by using project finances;
- Remaining amount of project finances that are refunded.
Credit side:
- Actually received project finances;
Balances on the Credit side: Amounts of project finances not yet to be used or already used, but not yet accounted for in the final account.
Article 36. Account 471 – Provisions payable
1. Accounting principles
a. This account shall be used for reflecting available provisions payable, setting aside funds for provisions and use of these provisions of microfinance institutions.
b. Provisions payable shall be recorded only if the following requirements are fully met:
- Microfinance institutions incur present debt obligations (legal or joint and several obligations) that result from an event that has already occurred;
- Reductions in economic benefits likely to occur lead to requirements for payment of debt obligations; and
- A reliable estimate of values of these obligations is made.
c. Recognized value of a provision payable is defined as the most properly estimated value of the monetary amount that will have to be spent on paying present debt obligations on the end date of an accounting year or on the end date of a half of the accounting year.
d. Provisions payable shall be set up at the date of preparation of a financial statement. In case where the amount of provisions payable that need to be set up in the present accounting period are greater than the amount of provisions payable that have already been set up in the previous accounting period and have not been used up, the difference shall be charged into operating expenses in that accounting period. In case where the amount of provisions payable that need to be set up in the present accounting period are less than the amount of provisions payable that have already been set up in the previous accounting period and have not been used up, the difference shall be reversely charged as a decrease in operating expenses in that accounting period.
dd. Only expenses related to the primary amount of provisions payable that have already been set up shall be compensated for by these provisions.
e. Provisions payable shall not be recognized in accounts reflecting future operating losses, except if they are connected to an agreement at high risk and meet requirements for recognition of provisions. If an enterprise enters into an agreement at high risk, agreed-upon current debt obligations must be recognized and deemed as a provision and the one specific to an agreement at high risk.
g. Provisions payable may usually include: Provisions for the periodic repair and maintenance of fixed assets (in conformance to technical requirements), provisions payable for agreements at high risk under which expenses bound to be paid to discharge contractual obligations exceed economic benefits expected to gain from these agreements.
h. Microfinance institutions may record provisions payable in administrative expenses.
2. Components and contents of this account
Debit side:
- Recording decreases in provisions payable in case expenses related to primary provisions arise;
- Recording decreases (reversely recording) provisions payable if microfinance institutions ensure that they will not suffer from economic declines because they no longer have to pay debts;
- Recording decreases in provisions payable to the difference in which provisions payable in the present year are less than provisions payable that have not yet been used up in the previous year.
Credit side:
Reflecting provisions payable charged into expenses.
Balances on the Credit side:
Reflecting total provisions payable that exist at end of an accounting period.
Article 37. Account 483 – Science and technology development funds
1. Accounting principles
a. This account shall be designed for reflecting the existing amount, increases and decreases of the science and technology development fund of a microfinance institution. The science and technology development fund shall be intended for scientific and technological investments in Vietnam.
b. The science and technology development fund shall be recorded into administrative expenses as a basis for determination of business results within an accounting period. Setting aside amounts for and using the science and technology development fund must conform to legislative regulations.
c. On a periodic basis, microfinance institutions shall prepare a report on the amount set aside for, use and final account of the science and technology development fund and submit it to the competent authority in accordance with laws.
2. Components and contents of this account
Debit side:
- Spending amounts derived from the science and technology development fund;
- Decreases in the science and technology development fund from which fixed assets are formed in case of calculation of depreciation on these fixed assets; the remaining value of fixed assets upon liquidation or disposal thereof; expenses for liquidation or disposal of fixed assets formed from the science and technology development fund.
- Decreases in the science and technology development fund from which fixed assets are formed in case those fixed assets formed from science and technology development activities are transferred for uses in business activities.
Credit side:
- Setting aside of amounts for setting up the science and technology development fund which are charged into administrative expenses.
- Proceeds from disposal and liquidation of fixed assets formed from the science and technology development fund used for formation of fixed assets.
Balances on the Credit side:
Total residual amount of the science and technology development fund at end of an accounting period.
Article 38. Account 484 – Reward and welfare funds
1. Accounting principles
a. This account shall be intended for reflecting the present amount, increases and decreases of the reward and welfare fund of a microfinance institution. The reward and welfare fund shall be set up from undistributed post-tax profits in accordance with laws.
b. Setting aside of amounts for and use of the reward and welfare fund shall be subject to current financial policies.
c. The reward and welfare fund must be accounted for in detail, depending on fund types.
d. As for fixed assets formed and purchased by using the welfare fund, after completion of formation and purchase, accountants must record increases in fixed assets and paid-in capital, and decreases in the welfare fund.
dd. As for fixed assets formed and purchased by using the welfare fund, after completion of such formation and purchase, accountants must record increases. These fixed assets shall not be depreciated on a monthly basis as expenses but, at the end of an accounting year, shall be depreciated once each year.
2. Components and contents of this account
Debit side:
- Spending amounts used for setting up the reward and welfare fund;
- Decreases in the welfare fund used for formation of fixed assets due to fixed asset depreciation, disposal, liquidation and discovery of lack of fixed assets after fixed asset stocktaking;
- Investment in and acquisition of fixed assets by using the welfare fund which serve cultural and welfare demands upon completion of such investment and acquisition;
- The reward and welfare fund allocations to branches.
Credit side:
- Setting aside of profits after CIT for setting up the reward and welfare fund;
- The welfare fund for formation of fixed assets increased due to investment in and acquisition of fixed assets by using the welfare fund after completion of such investment and acquisition and bringing such assets into operation.
Balances on the Credit side:
The existing amount available in the reward and welfare fund.
Article 39. Account 491 – Interest and fees payable
1. Accounting principles
a. This account shall be designed for reflecting interest and fee amounts that microfinance institutions have to pay, including: Loan interest, deposit interest payable to customers making deposits at microfinance institutions, interest payable on entrusted loans, entrustment fees payable to entrustees; fees payable by microfinance institutions using products and services from providers, etc.
b. Interest payable shall be recorded on the basis of timelength and actual interest rates over repayment periods.
c. Interest and fees payable that demonstrate the accrued amount of interest that microfinance institutions have recorded into expenses but have not yet paid to customers.
2. Components and contents of this account
Debit side:
- Interest and fee amounts that microfinance institutions have already paid;
- Loan and deposit interest amounts that microfinance institutions have already paid;
- Fee amounts that microfinance institutions have already paid to suppliers;
Credit side:
- Interest and fee amounts payable by microfinance institutions;
- Loan and deposit interest amounts payable by microfinance institutions;
- Fee amounts payable to suppliers.
Balances on the Credit side:
Reflecting the remaining amount of interest and fee amounts payable by microfinance institutions at the reporting time.
Article 40. Account 519 – Intracompany payments
1. Accounting principles
a. This account shall be designed for reflecting current conditions of payments inside of microfinance institutions, including: Capital inflows and outflows from microfinance institution s headquarters to their affiliates and vice versa; collections, payments on behalf of customers or other settlements between affiliates in the same system arising during transactions.
b. Account 519 – “Intracompany payments” must include subaccounts reflecting details of payments made by affiliates of microfinance institutions.
2. Components and contents of this account
Debit side:
- Capital outflows;
- Amounts already paid to affiliates;
- Amounts that affiliates have already paid to microfinance institutions;
- Amounts already paid for payments made by affiliates on behalf of microfinance institutions;
- Amounts collected on behalf of affiliates inside of microfinance institutions.
Credit side:
- Capital inflows;
- Amounts payable by affiliates to microfinance institutions;
- Amounts payable to affiliates;
- Amounts payable to other affiliates inside of microfinance institutions on payments made by these affiliates on behalf of these microfinance institutions;
- Amounts collected on behalf of other affiliates.
Balances on the Debit side:
- Positive difference between capital outflows and capital inflows;
- Amounts already paid to affiliates inside of microfinance institutions, which are greater than amounts payable.
Balances on the Credit side:
- Positive difference between capital inflows and capital outflows;
- Remaining amounts payable to affiliates inside of microfinance institutions.
Article 41. Account 601 – Paid-in capital
1. Accounting principles
a. This account shall be designed for reflecting increases and decreases in capital invested in business by owners of microfinance institutions.
b. Paid-in capital shall be comprised of the followings:
- Equity of microfinance institutions;
- Supplementary amounts derived from funds set up by equity and after-tax profits generated from business operations;
- Non-refundable aids and other receipts that competent authorities allow to be recorded as increases in paid-in capital.
c. Microfinance institutions shall only record the actual amount of capital contributed by owners in the Account 601 - "Paid-in capital", and shall not be entitled to record amounts agreed upon in commitments and amounts payable by owners.
d. Microfinance institutions shall have to record details of the paid-in capital by posting entries recording specific sources of funding for formation of paid-in capital and keep a detailed record of transactions performed by organizations and individuals making capital contribution.
dd. Microfinance institutions must record decreases in the paid-in capital in the following cases:
- Microfinance institutions repay capital to the State Bank or have to transfer capital under the decision of a competent body;
- They reimburse capital to owners under laws;
- Their business is dissolved or terminated as per laws;
- Other situations arising as provided by law.
2. Components and contents of this account
Debit side: Paid-in capital decreased due to:
- Reimbursement of capital to contributing owners;
- Transfer of capital to other entities;
- Business dissolution or closure;
- Compensation for losses arising from business operations under the decision of a competent entity.
Credit side: Paid-in capital increased due to:
- Owner’s contribution of capital;
- Supplementation of capital by using business profits and funds set up by using equity;
- Value of gifts, donations and finances (after deduction of taxes payable) which is recorded as increases in the paid-in capital under the decision of a competent entity.
Balances on the Credit side: Existing paid-in capital.
Article 42. Account 611 – Charter capital supplementation reserve funds
1. Accounting principles
a. This account shall be used for reflecting the existing amounts, increases and increases of a reserve fund for supplementation of the charter capital of a microfinance institution.
b. Charter capital supplementation reserve funds shall be set up by setting aside profits after CIT and may be used for supplementing the charter capital and allocation capital of microfinance institutions.
c. Setting aside of amounts for and use of charter capital supplementation reserve funds must be subject to current financial policies for microfinance institutions.
2. Components and contents of this account
Debit side: Recording payments derived from and use of the charter capital supplementation reserve fund.
Credit side: Setting aside amounts to set up the charter capital supplementation reserve fund by using annual after-tax profits.
Balances on the Credit side: Amounts available in the charter capital supplementation reserve fund at the reporting time.
Article 43. Account 612 – Development and investment funds
1. Accounting principles
a. This account shall be designed for reflecting the existing amounts, increases and decreases of the fund for investment in development of microfinance institutions.
b. The investment and development fund shall be set up by using profits after CIT and shall be used for investing in expansion of the business size and renovation of technologies, equipment and working conditions of microfinance institutions and supplementation of charter capital of microfinance institutions.
c. Setting aside of amounts for and use of charter capital supplementation reserve funds must be subject to current financial policies for microfinance institutions.
2. Components and contents of this account
Debit side:
Recording payments in and use of the investment and development fund.
Credit side:
The investment and development fund increased because it is set up by using after-tax profits.
Balances on the Credit side:
Amounts available in the charter capital supplementation reserve fund at the reporting time.
Article 44. Account 613 - Financial reserve funds
1. Accounting principles
a. This account shall be designed for reflecting the existing amounts, increases and decreases of the financial reserve fund of a microfinance institution.
b. The financial reserve fund shall be set up by using profits after CIT and shall be used for compensating for the remaining part of material losses or damage occurring in the business process after they have already been offset by compensations from defaulting organizations or individuals and insurance organizations, and by using provisions charged as expenses; shall be used for other purposes in accordance with laws.
c. Setting aside of amounts for and use of financial reserve funds must be subject to current financial policies for microfinance institutions.
2. Components and contents of this account
Debit side:
Recording payments in and use of the financial reserve fund.
Credit side:
The financial reserve fund increased due to use of annual after-tax profits for setting up such fund.
Balances on the Credit side:
Amounts available in the financial reserve fund at the reporting time.
Article 45. Account 631 - Differences upon asset revaluation
1. Accounting principles
a. This account shall be used for reflecting the differences upon revaluation of existing assets and current conditions of disposal of these differences at microfinance institutions.
b. Microfinance institutions shall only be allowed to revaluate assets at the market price in case Vietnamese accounting standards or financial policies permit or once they receive decisions from competent entities.
c. Microfinance institutions shall use subaccounts recording details of specific assets subject to revaluation.
2. Components and contents of this account
Debit side:
- Negative differences arising due to revaluation of assets;
- Actions against positive differences arising due to revaluation of assets.
Credit side:
- Positive differences arising due to revaluation of assets;
- Actions against negative differences arising due to revaluation of assets.
Account 631 may have balances on the Debit side or the Credit side.
Balances on the Debit side:
Reflecting negative differences arising due to revaluation of assets awaiting resolution.
Balances on the Credit side:
Reflecting positive differences arising due to revaluation of assets awaiting resolution.
Article 46. Account 641 – Exchange differences
1. Accounting principles
a. This account shall be used for reflecting differences arising from foreign exchange rates at microfinance institutions. Exchange difference is defined as the difference arising from actual exchanges or conversions of the same amount of foreign currency into accounting units of currency at the different exchange rates. The exchange difference mainly arises in the following cases:
- Actually buying, purchasing, trading and paying for economic transactions in foreign currencies within an accounting period;
- Revaluating monetary items of foreign currency origin at the time of preparation of financial statements;
- Making conversions of a financial statement in a foreign currency into Vietnamese dong.
b. Transactions related to foreign currencies: Microfinance institutions must convert value in a foreign currency into that in Vietnamese dong in accordance with applicable laws applied to credit institutions.
c. Upon the date of preparation of financial statements, microfinance institutions shall carry out the revaluation of monetary items of foreign currency origin in accordance with applicable laws applied to credit institutions.
d. As for any foreign currency of which the rate of exchange into Vietnamese dong is not available, it shall be obligatory to exchange it into a currency of which the rate of exchange into Vietnamese dong is available.
dd. Microfinance institutions shall not be entitled to distributed profits or dividends on interest earned from the exchange difference upon revaluation of monetary items of foreign currency origin at the end of a fiscal year .
e. In addition, microfinance institutions shall have to keep record of base currencies on detailed accounting books of such accounts as: Cash, bank deposits, receivables and payables.
2. Components and contents of this account
Debit side:
- Exchange losses incurred due to revaluation of balances of monetary items of foreign currency origin;
- Carry-forward of exchange interest to the account of other operating revenues.
Credit side:
- Exchange interest generated owing to revaluation of balances of monetary items of foreign currency origin;
- Carry-forward of exchange losses to the account of other operating expenses.
The Account 641 shall not have the balances at the end of an accounting period.
Article 47. Account 691 - Undistributed post-tax profits
1. Accounting principles
a. This account shall be used for reflecting business results (profit or loss) after CIT and assessing distribution of profits or handling of losses incurred by microfinance institutions.
b. The distribution of profits gained from business operations of microfinance institutions must be clear, apparent and conform to current financial policies.
c. It shall be necessary to record details of business results in each fiscal year (previous or present year).
2. Components and contents of this account
Debit side:
- Business losses of microfinance institutions;
- Setting up funds of microfinance institutions;
- Distribution of profits to owners;
- Supplementing the paid-in capital.
Credit side:
- Actual amounts of profits generated from business operations within an accounting period;
- Handling losses incurred from business operations.
Account 691 may have balances on the Debit side or the Credit side.
Balances on the Debit side:
Business losses awaiting resolution.
Balances on the Credit side:
Total amount of after-tax profits not yet to be distributed or used.
Article 48. Principles of accounting for revenues
This account shall be intended for reflecting revenues of microfinance institutions, including: Revenues generated from credit, service and other business operations, and others.
Recording of entries in this Account shall be regulated as follows:
1. This account shall be designed for reflecting all revenues of microfinance institutions. At end of an accounting period, all balances on this account shall be carried forward to the Account 001 – Determination of business results until no balance is left.
2. Revenues are defined as economic benefits obtained to help increase the equity of microfinance institutions, except for additional contribution portions of owners. Revenues shall be recorded at the time when transactions arise. Once it is obvious that economic benefits are gained, they shall be determined according to the reasonable value of amounts to which microfinance institutions are entitled, irrespective of whether money has been or will be received.
3. Revenues and expenses creating these revenues shall be recorded concurrently according to the matching principle.
4.In case of liquidation or disposal of fixed assets, the value used for recording entries in this account shall be all of proceeds from such liquidation or disposal transactions. All of costs incurred from such liquidation and disposal shall be recorded in the expense account.
5.At the end of an accounting period, upon preparation of financial statements, those amounts arising from intracompany transactions (e.g. collecting interest on deposits or lending funds within a microfinance institution) must be eliminated.
7.Off-balance sheet commitment revenues must be distributed during the period of implementation of a commitment.
Revenues shall be recorded in the following accounts:
- Account 701 – Revenues generated from credit operations;
- Account 711 – Revenues generated from service operations;
- Account 741 – Revenues generated from other operations;
- Account 791 – Other revenues.
Article 49. Account 701 – Revenues generated from credit operations
1. Accounting principles:
a. This account shall be designed for reflecting interest and similar revenues, including: Deposit interest receipts, loan interest receipts, receipts of interest earned from debt trading activities and other receipts from credit operations in accordance with laws.
- Deposit interest receipts, including receipts from deposits that microfinance institutions make at the State Bank or at domestic credit institutions (if any);
- Loan interest receipts: including receipts from interest on loans in Vietnamese dong granted to domestic economic organizations and individuals (even including cases in which microfinance institutions directly lend funds and entrust loans);
- Other receipts from credit operations: Including other receipts from credit transactions of microfinance institutions, which are other than those stated above.
b. Recording of revenues from credit operations shall be subject to regulations set out in the current financial system.
c. Recording entries in this account must adhere to the Vietnamese Accounting Standard No. 14 – “Sales and other income”.
d. The following entries shall not be recorded in this account:
- Proceeds from liquidation and disposal of fixed assets;
- Written-off debts that are now recovered;
- Receipts from imposition of penalties; insurance covers;
- Receipts from receiving non-refundable aids;
- Other receipts.
2. Components and contents of this account:
Debit side:
- Deductions from revenues generated from credit operations;
- Carry-forward of net revenues generated from credit operations to the account 001 “Determination of business results”.
Credit side: Revenues from credit operations earned within an accounting period.
The Account 701 shall not have the balances at the end of an accounting period.
Article 50. Account 711 – Revenues generated from service operations
1. Accounting principles:
a. This account shall be designed for reflecting revenues from service operations, including:
- Receipts from payment services;
- Receipts from cashier services;
- Receipts from acting as loan entrustees;
- Receipts from provision of collection, payment and money transfer services, including receipts from charges for payment services that microfinance institutions render to customers, such as payment, collection, commission collection and other payment services, etc.;
- Receipt from financial counseling services related to the microfinance sector;
- Receipts from insurance service agents;
- Receipts from other services, such as receipts from provision of such services as safekeeping of property, payment of safe or cabinet rents; receipt from provision of products serving the public interest, etc.
b. Recording entries in this account must adhere to the Vietnamese Accounting Standard No. 14 – “Revenues and other income”.
c. Revenues from provision of services shall not be inclusive of indirect taxes payable, such as VAT, special consumption tax, import duty and environmental protection tax.
In case where it is impossible to immediately separate indirect taxes payable at the time of recognition of revenues, accountants may record revenues, including tax amounts payable and periodic decreases in revenues recorded in indirect taxes payable. Upon preparation of income statements, the indicator measuring “Revenues generated from services” shall not include indirect tax amounts payable within an accounting period because, in nature, indirect taxes are not considered as part of revenues.
2. Components and contents of this account:
Debit side:
- Deductions from revenues generated from services;
- Receipts from debts handled by risk provisions against risk (including debts written off but now recovered);
- Carry-forward of net revenues generated from services to the account 001 “Determination of business results”.
Credit side:
Revenues from services earned within an accounting period.
The Account 711 shall not have the balances at the end of an accounting period.
Article 51. Account 741 – Revenues generated from other operations
1. Accounting principles:
This account shall be intended for reflecting revenues from other operations of microfinance institutions, including:
- Receipts from debt trading activities;
- Receipts from reversal of provisions;
- Interest on foreign exchange rates;
- Receipts from other business activities under laws.
2. Components and contents of this account:
Debit side:
- Deductions from revenues from other business activities;
- Carry-forward of net revenues generated from other business activities to the account 001 “Determination of business results”.
Credit side:
Revenues from business activities earned within an accounting period.
The Account 741 shall not have the balances at the end of an accounting period.
Article 52. Account 791 – Other revenues
1. Accounting principles:
a. This account shall be intended for reflecting other revenues of microfinance institutions, except those generated from credit operations, revenues generations from services and revenues from other activities.
b. Other revenues of microfinance institutions may be accounted for in the Account 791, including receipts from debts owed to unknown or untraceable creditors; receipts from liquidation and disposal of assets; receipts from monetary penalties on customers and compensations for breach of contract; receipts from insurance covers; receipts from non-refundable aids, tax deductions and refunds; receipts from debts handled by provisions against risk (even including debts written off but now recovered), etc.
2. Components and contents of this account:
Debit side:
Carry-forward of net revenues to the account 001 “Determination of business results”.
Credit side:
Other revenues of microfinance institutions earned within an accounting period.
The Account 791 shall not have the balances at the end of an accounting period.
Article 53. Principles of accounting for expenses
1. Expenses are defined as amounts that result in decreases in economic benefits and are recorded at the time of a transaction that arises or rather definitely arises in the future, regardless of whether money is spent or not.
2. Recording expenses even if the payment deadline does not expire but it is rather obvious that they will arise must adhere to the prudence and capital preservation principles. Expenses and revenues generated by incurring these expenses shall be recorded concurrently according to the matching principle. However, in certain cases, the matching principle may be conflicting with the prudence principle in the accounting sector, accountants must refer to the nature of and Accounting Standards for reflecting transactions in a reliable and rational manner.
3. Expenses that are not deemed as assessable ones set off against CIT under the provisions of the Law on Taxation, but are proved by invoices and evidencing documents, and have been accounted for according to the accounting regime, shall not be recorded as decreases in expenses in balance sheets but may only be adjusted in the CIT finalization as increases in the CIT amounts payable.
4. This account shall be intended for reflecting expenses of microfinance institutions, including: Expenses for credit operations; expenses for services; CIT expenses; other operating expenses; administrative expenses; provisional expenses; other expenses.
At end of an accounting period, all balances of expenses proved by evidencing documents shall be carried forward to the Account 001 – “Determination of business results” until none of them is left.
5. In case of liquidation and disposal of fixed assets, total value accounted for in this account shall be all of expenses associated with the liquidation, disposal of fixed assets, the value of fixed assets upon liquidation and disposal remaining after these expenses have already been offset by using compensations of individuals, collectives and insurance organizations (if any - in case where related collectives or individuals cause loss or damage to these assets or insured assets). All proceeds from liquidation and disposal of fixed assets shall be recorded in the account reflecting other revenues.
6. Expenses shall be recorded in the following accounts:
- Account 801 – Expenses incurred from credit operations;
- Account 811 – Expenses incurred from service operations;
- Account 831 – CIT expenses;
- Account 841 – Other operating expenses;
- Account 851 – Administrative expenses;
- Account 881 – Provisional expenses;
- Account 891 - Other costs.
Article 54. Account 801 – Expenses incurred from credit operations
1. Accounting principles:
a. This account shall be designed for reflecting expenses incurred from credit operations of microfinance institutions that may arise within an accounting period, including: Deposit payments; compulsory savings; expenses for preservation and protection of customer’s deposits; deposit interest payments; loan interest payments; and other expenses incurred from credit operations.
- Expenses incurred from deposit interest payments, including amount paid for deposit interest, compulsory savings and other deposit interest in Vietnamese dong to economic organizations and individuals as microfinance institution’s customers, other persons and entities.
- Expenses incurred from loan interest payments, including amounts paid for interest on loans granted by the Government and the State Bank, loans extended by domestic credit institutions, and loans granted by both domestic and foreign organizations and individuals.
- Expenses incurred from preservation and protection of customer’s deposits, including expenses paid to companies providing deposit insurance for customers.
- Other expenses incurred from credit operations, including other expenses incurred from interest payments and equivalent interest payments other than the abovementioned.
b. The account 801 shall only reflect actual expenses directly related to credit operations and shall contain subaccounts specific to details of expenses in accordance with regulations in force.
2. Components and contents of this account:
Debit side:
Expenses incurred from credit operations within an accounting period.
Credit side:
- Expenses recorded as decreases in costs of credit operations;
- Carry-forward of expenses incurred from credit operations to the account 001 - “Determination of business results”.
The Account 801 shall not have the balances at the end of an accounting period.
Article 55. Account 811 – Expenses incurred from service operations
1. Accounting principles:
This account shall be designed for reflecting expenses directly related to credit operations, including:
- Payments for collection, payment and money transfer services that microfinance institutions provide to customers;
- Payments for telecommunications services;
- Payments of loan entrustment fees;
- Payments for financial counseling services related to the microfinance sector;
- Payments of commissions paid agents, brokers and for entrustment in licensed agent, broker and entrustment activities;
- Payments for acting as agents providing insurance services.
2. Components and contents of this account:
Debit side:
Expenses incurred from service operations within an accounting period.
Credit side:
- Expenses recorded as decreases in costs of service operations;
- Carry-forward of expenses incurred from service operations to the account 001 - “Determination of business results”.
The Account 811 shall not have the balances at the end of an accounting period.
Article 56. Account 831 – CIT expenses
1. Accounting principles:
a. This account shall be intended for reflecting expenses incurred from payments of CIT arising within a year as a basis for determination of business results after tax of a microfinance institution in a present fiscal year.
b. Current CIT expenses shall be defined as total corporate income tax amount payable that is calculated based on taxable income earned within a year and the current CIT rate.
2. Components and contents of this account:
Debit side:
- CIT expenses arising within an accounting year;
- Current CIT amounts in previous years that must be additionally paid due to discovery of immaterial errors in the previous years shall be recorded as increases in current CIT expenses in the current year;
- Carry-forward of the positive difference between balances on the Credit side and those on the Debit side in the Account 831 within a year to the Account 001 – “Determination of business results”.
Credit side:
- CIT amounts actually payable in a year which are less than current CIT amounts paid in advance, which are deducted from current CIT expenses recorded in within a year;
- CIT amounts payable recorded as decreases due to discovery of immaterial errors arising in the previous years, which shall be recorded as decreases in the current year;
- Carry-forward of the positive difference between balances on the Debit side and those on the Credit side in the Account 831 within a year to the Account 001 – “Determination of business results”.
The Account 831 shall not have the balances at the end of an accounting period.
Article 57. Account 841 – Other operating expenses
1. Accounting principles:
This account shall be designed for reflecting expenses directly related to other operations performed by microfinance institutions, including: Payments for debt trading activities, foreign exchange losses and other operations in accordance with laws.
2. Components and contents of this account:
Debit side:
Other operating expenses arising within an accounting period.
Credit side:
- Expenses recorded as decreases in other operating costs;
- Carry-forward of other operating expenses to the account 001 - “Determination of business results”.
The Account 841 shall not have the balances at the end of an accounting period.
Article 58. Account 851 – Administrative expenses
1. Accounting principles:
a. This account shall be designed for reflecting general administrative expenses of microfinance institutions, including:
- Amounts paid to officers and employees as provided by laws (e.g. salaries, wages and the like); payments of contributions associated with salaries or wages (e.g. SI, HI, union dues and UI); payments of redundancy pay to employees under laws on labor; payments for human accident insurance policies; payments for personal protective equipment provided for employees needing them at work; payments for uniform of staff members; payments for shift meals; payments for healthcare services; other payments to employees in accordance with laws.
- Payments for management and business activities, such as payments for printing materials and paper sheets; payments for business travels; payments for courses in training in enhancement of competence of officers and employees, including payments for providing training for collaborators and customers within the scope of business of a microfinance institution; payments for science and technology research and application activities; payments for innovations, inventions, improvements of labor productivity, and bonuses for efforts to save costs; payments of postal and phone costs; payments for publishing materials, communications, advertising, marketing and promotion activities; payments for purchase of materials, books and newspapers; payments for electricity, water bills and office cleaning services; payments for conferences, guest reception service, festivity and external relation activities; payments for hiring of consultants, domestic and foreign experts; payments for audit services; fire safety expenses; environmental protection expenses; others.
- Property expenses, such as: Payments for depreciation on fixed assets; payments of fixed asset rents; payments for maintenance and repair of fixed assets; payments for purchase and repair of tools and instruments; payments for property insurance policies; other payments related to assets in accordance with laws.
b. Microfinance institutions shall use tier-2 accounts for recording details of expenses to meet their administrative requirements. At end of an accounting period, accountants shall carry forward administrative expenses to the Account 001 - “Determination of business results”.
2. Components and contents of this account:
Debit side:
Administrative expenses arising within an accounting period.
Credit side:
- Amounts set off against administrative expenses;
- Carry-forward of administrative expenses to the Account 001 - “Determination of business results”.
The Account 851 shall not have the balances at the end of an accounting period.
Article 59. Account 881 – Provision expenses
1. Accounting principles:
- This account shall be designed for reflecting the existing amounts, increases and decreases of provisions of microfinance institutions, including: Provisions against lending risks; provisions against risks of receivables and provisions for payables.
+ Provisions against lending risks reflect a microfinance institution s setting up provisions and handling of provisions against risk under applicable regulations on microfinance institution’s loans granted to customers.
+ Provisions against risks of receivables from outside reflect the setting aside of amounts for setting up provisions and the treatment of provisions for receivables from outside of a microfinance institution.
+ Provisions for payables reflect the formation of provisions and the treatment of provisions for payables of microfinance institutions.
2. Components and contents of this account:
Debit side: Provision expenses arising within an accounting period.
Credit side:
- Amounts recorded as decreases in provision expenses;
- Carry-forward of provision expenses to the Account 001 - “Determination of business results”.
The Account 881 shall not have the balances at the end of an accounting period.
Article 60. Account 891 – Other expenses
1. Accounting principles:
a. This account shall be designed for reflecting other expenses of microfinance institutions, except for expenses incurred from credit operations, expenses incurred from services, expenses incurred from CIT, expenses incurred from other business operations and provision expenses, including:
- Expenses incurred from liquidation and disposal of fixed assets;
- The value of fixed assets upon liquidation and disposal remaining after these expenses have already been offset by using compensations of individuals, collectives and insurance organizations (if any - in case where related collectives or individuals cause loss or damage to these assets or insured assets);
- Payments of fees for becoming members of trade associations under laws;
- Payments for the Party and trade union activities at microfinance institutions;
- Payments for recovery of written-off debts and expenses incurred from recovery of bad debts;
- Payments for treatment of remaining losses of assets;
- Payments of amounts already accounted for as revenues but actually not collected;
- Payments for social responsibility activities prescribed by laws;
- Administrative fines;
- Other expenses stipulated in the financial regime of a microfinance institution.
b. As for expenses that are not deemed as rational or valid ones used for calculation of CIT under the provisions of the Law on Taxation, but are fully proved by invoices and evidencing documents, and have been accounted for according to the accounting regime, shall not be recorded as decreases in expenses in balance sheets but may only be adjusted in the CIT finalization as increases in the CIT amounts payable.
2. Components and contents of this account:
Debit side:
Other expenses arising within an accounting period.
Credit side:
- Amounts recorded as decreases in other expenses;
- Carry-forward of other expenses to the Account 001 - “Determination of business results”.
The Account 891 shall not have the balances at the end of an accounting period.
Article 61. Account 001 – Determination of business results
1. Accounting principles
a. This account shall be used for determining and reflecting outcomes of business and other activities of a microfinance institution within an accounting period. Business results of a microfinance institution shall comprise: Credit business results, service business results, results of other operations and other business results.
- Credit business results are defined as the difference between income from credit operations and expenses incurred from credit operations, expenses incurred from provisions against loan risk and administrative expenses;
- Service business results are defined as the difference between service business income and service business expenses;
- Other business results are defined as the difference between other business income and other operating expenses;
- Other business results are defined as the difference between other income and other expenses plus CIT expenses.
b. This account must reflect business results in a sufficient and accurate manner within an accounting period. Business results must be recorded in subaccounts reflecting details of each type of operation.
c. Revenues and incomes carried forward to this account must be the net revenue amounts.
2. Components and contents of this account:
Debit side:
- Carry-forward of credit business expenses;
- Carry-forward of service business expenses;
- Carry-forward of CIT expenses;
- Carry-forward of other operating expenses;
- Carry-forward of administrative expenses;
- Carry-forward of provision expenses;
- Carry-forward of other expenses;
- Carry-forward of profits.
Credit side:
- Carry-forward of credit business revenues;
- Carry-forward of service business revenues;
- Carry-forward of other business revenues;
- Cary-forward of other revenues and amounts recorded as decreases in CIT expenses;
- Carry-forward of losses.
The Account 001 shall not have the balances at the end of an accounting period.
Article 62. Account 901 – Money impermissible in circulation
1. Accounting principles
a. This account shall be designed for keeping track of amounts suspected of counterfeit, counterfeit currencies or damaged currencies awaiting disposal.
b. Microfinance institutions shall be responsible for keeping a detailed record of specific monetary amounts.
2. Components and contents of this account
Debit side: Value of monetary amounts received and awaiting resolution.
Credit side: Value of monetary amounts already been disposed of.
Balances on the Debit side: Reflecting value of sample money, play money, money suspected of counterfeit, damaged money awaiting disposal of microfinance institutions and in a state of preservation.
Article 63. Account 911 – Public debts in foreign currencies
1. Accounting principles
a. As for amounts in base currencies accounted for as off-balance sheet entries in this account, the conventional value of each base currency unit is 1 dong (one dong), including: Short-term borrowing of foreign currency origin; long-term borrowing of foreign currency origin; entrusted funds of foreign currency origin received; finances of foreign currency origin received; interest payable in foreign currencies; project funding in foreign currencies.
b. Microfinance institutions shall be responsible for keeping a detailed record of specific base currencies.
2. Components and contents of this account
Debit side: Value receivable or payable, which is of foreign currency origin.
Credit side: Already reimbursed value which is of foreign currency origin.
Balances on the Debit side: Reflecting total foreign currency amounts receivable or payable, which are of foreign currency origin.
Article 64. Account 912 – Assets in foreign currencies
1. Accounting principles
a. As for amounts in base currencies accounted for as off-balance sheet entries in this account, the conventional value of each base currency unit is 1 dong (one dong), including: Foreign currency cash; foreign currency deposits at credit institutions; foreign currency interest receivable.
b. Microfinance institutions shall be responsible for keeping a detailed record of specific base currencies.
2. Components and contents of this account
Debit side: Value of cash balance, receipts and deposits at credit institutions, all of which are of foreign currency origin.
Credit side: Value already paid or withdrawn from credit institutions, which are of foreign currency origin.
Balances on the Debit side: Reflecting total amount of cash balances or deposits currently made at credit institutions, which are of foreign currency origin.
Article 65. Account 941 – Lending interest and fees receivable but not yet collected
1. Accounting principles
a. This account shall be used for reflecting delinquent loan interest amounts in Vietnamese dong that microfinance institutions have not yet collected, including the following interest amounts: Lending interest not yet collected from customers of microfinance institutions; lending interest not yet collected from other customers; lending interest not yet collected from financing or entrusted loans; fees receivable but not yet collected.
b. Microfinance institutions must use subaccounts recording details of specific borrowers that have not yet paid interest to lending microfinance institutions.
2. Components and contents of this account
Debit side: Interest amounts not yet collected.
Credit side: Interest amounts already collected.
Balances on the Debit side: Reflecting total Vietnamese dong interest amounts receivable by microfinance institutions.
Article 66. Account 971 - Bad debts already written off
1. Accounting principles
a. This account shall be used for recording the followings:
- Charged-off debts under surveillance: Charged-off debts (including principal and interest) already offset by provisions against risk and put under control to continue to be recovered gradually. The period of surveillance in this account must be subject to regulations adopted by the Ministry of Finance. Upon expiration of such period, if debts are not recovered, they must be remitted under applicable regulations;
- Charged-off debts arising from payment activities: This account shall be used for keeping track of debts charged off during payment activities of microfinance institutions which have been offset by provisions against risks, are under surveillance for recovery of all of such debts. The surveillance period in this account must be subject existing regulations of the Ministry of Finance. Upon expiration of such period, if debt amounts are still outstanding, all of these debts shall be remitted.
b. Microfinance institutions must use subaccounts recording details of specific borrowers and debts. As for debts to be remitted under the Government s orders, they shall not be recorded in this account.
2. Components and contents of this account
Debit side:
Bad debts already offset but kept under surveillance outside of financial status reports.
Credit side:
- Amounts recoverable from borrowing customers;
- Debt amounts charged off after the surveillance period expires.
Balances on the Debit side: Reflecting the amount of charged-off debts already offset but continuing to be put under surveillance for recovery at the reporting time.
Article 67. Account 983 – Entrustment and agent operations
1. Accounting principles
a. This account shall be used for recording the followings:
- Lending under entrustment agreements: This account must be used by microfinance institutions entrusted with lending of borrowed funds and shall be designed for reflecting lending and recovery of borrowed funds, including unmatured debts and overdue debts, by using entrusted funds for lending (entrustees do not have to bear lending risks).
Microfinance institutions entrusted with granting loans shall refer to the financial status and solvency capacity of customers in order to classify loans by entrusted funds (entrustees do not have to bear lending risks) under applicable regulations on classification of debts of the State Bank, and at the same time, shall promptly inform the entrusting party (the third party) of the financial status and solvency capacity of customers in order for the entrusting party to assume liability for classification of debts and setting aside of amounts for provisions against risk in accordance with regulations enforced by the State Bank. Microfinance institutions shall keep record of details of specific borrowing customers.
- Other agent services: This account shall be used by microfinance institutions holding trust, acting as agents and shall be designed for reflecting implementation of other agent services.
2. Components and contents of this account
Debit side: Amounts lent by entrusted funds.
Credit side: Amounts paid by borrowers.
Balances on the Debit side: Reflecting the amounts currently borrowed by customers.
Article 68. Account 991 – Fixed assets used in programs and projects
1. Accounting principles
This account shall be intended for reflecting fixed assets used in programs and projects implemented by microfinance institutions.
2. Components and contents of this account
Debit side:
Value of fixed assets purchased or acquired in programs and projects.
Credit side:
Value of fixed assets disposed of or transferred to branches of microfinance institutions.
Balances on the Debit side:
Reflecting total value of fixed assets used in programs and projects.
Article 69. Account 992 – Other assets kept in custody
1. Accounting principles
a. This account shall be used for reflecting assets transferred by other entities to be kept in the custody of microfinance institutions under the prescribed regime. The value of custodial assets shall be recorded at the actual price of each object. If the price is not available yet, the temporary price may be used for bookkeeping purposes.
b. Microfinance institutions shall keep a detailed record of specific custodial assets. In addition to detailed account books, microfinance institutions must keep safekeeping receipts for assets.
2. Components and contents of this account
Debit side: Value of custodial assets.
Credit side: Value of assets returned to safekeeping customers.
Balances on the Debit side: Reflecting total value of assets that microfinance institutions keep in custody at the reporting time.
Article 70. Account 993 – Outsourced assets
1. Accounting principles
a. This account shall be designed for reflecting assets that microfinance institutions outsource for use;
b. In addition to detailed account books, microfinance institutions must keep a detailed journal of assets of specific owners.
2. Components and contents of this account
Debit side:
Value of outsourced assets.
Credit side:
Value of assets returned to asset owners.
Balances on the Debit side:
Reflecting total value of outsourced assets that microfinance institutions keep in custody at the reporting time.
Article 71. Account 994 – Security pledges or collateral
1. Accounting principles
a. This account shall be designed for reflecting property that borrowing entities and persons put up as pledges or collateral to receive loans in accordance with regulations of the State Bank.
b. In addition to detailed account books, microfinance institutions must keep a detailed journal of security pledges and collateral of specific borrowing entities or persons.
2. Components and contents of this account
Debit side:
Value of pledges and collateral under the control of microfinance institutions as security for loans.
Credit side:
- Value of pledges and collateral returned to borrowing entities and persons who have discharged their debt repayment obligations;
- Value of pledges and collateral closed out to repay loan debts to microfinance institutions.
Balances on the Debit side:
Reflecting total value of pledges and collateral that microfinance institutions keep in custody at the reporting time.
Article 72. Account 995 – Property pledged and appropriated for repayment of debts, awaiting resolution
1. Accounting principles
a. This account shall be designed for reflecting property that are pledged by and appropriated from borrowing organizations or individuals for loans granted by microfinance institutions and await resolution because they are not sufficient to guarantee fulfillment of debt repayment obligations.
b. In addition to detailed account books, microfinance institutions must keep a detailed journal of property pledged or appropriated for debt repayment of specific borrowing entities or persons.
2. Components and contents of this account
Debit side: Value of assets that are currently kept in the custody of microfinance institutions and are awaiting resolution.
Credit side: Value of assets that have been temporarily kept in the custody of microfinance institutions and already been disposed of.
Balances on the Debit side: Reflecting total value of assets temporarily kept in the custody of microfinance institutions and awaiting resolution owing to insufficient security for loans granted by microfinance institutions at the reporting time.
Article 73. Account 996 – Tools and instruments in use
1. Accounting principles
This account shall be designed for reflecting value of tools and instruments in use at microfinance institutions. They must be strictly monitored during the period from the date of dispatch to the date of notification of any damage. Microfinance institutions must adopt specific regulations on management, use and liquidation of tools and instruments to ensure the safe and effective use thereof.
- Once taking out of warehouses to be used for business purposes, all value of tools and instruments of low value shall be distributed to expenses one time.
- If tools and instruments of high value are taken out of warehouses for use one time and used in multiple accounting periods, value of such tools and instruments shall be recorded in the account “Administrative expenses” and gradually distributed into expenses over accounting periods.
2. Components and contents of this account
Debit side: Value of tools and instruments increased once they are taken out of warehouses for use;
Credit side: Value of tools and instruments decreased owing to notification of damage, loss and for other reasons.
Balances on the Debit side: Total value of tools and instruments currently in use at the reporting time.
Article 74. Account 998 – Property and valuable papers pledged or hypothecated by microfinance institutions
1. Accounting principles
a. This account shall be designed for reflecting property and valuable papers that microfinance institutions pledge or hypothecate as security for repayment of loan debts.
b. Microfinance institutions shall keep record of details of specific pledged and hypothecated property.
2. Components and contents of this account
Debit side: Value of property that credit institutions pledge or hypothecate as security for loan debts.
Credit side:
- Value of pledged and hypothecated property returned after debts have been repaid;
- Value of pledged and hypothecated property already disposed of.
Balances on the Debit side: Reflecting total value of property that credit institutions are pledging and hypothecating.
Article 75. Account 999 – Other valuable documents in custody
1. Accounting principles
This account shall be designed for recording valuable documents that microfinance institutions are responsible to keep in their custody, including passbooks kept in the custody of microfinance institutions for customers. Value of documents accounted for according to the amounts specified on these documents.
2. Components and contents of this account
Debit side: Value of documents received for safekeeping.
Credit side: Value of documents taken out.
Balances on the Debit side:Reflecting value of documents kept in the custody of microfinance institutions.
Chapter III
FINANCIAL REPORTING
Article 76. General provisions
This Chapter shall provide for contents, methods of preparation, representation and other matters relating to the Financial Reporting System of microfinance institutions.
Financial statement of a microfinance institution (hereinafter referred to as financial statement) must be prepared in accordance with Vietnamese accounting standards and accounting regimes in force in order to record main economic and financial information of that microfinance institution. Financial reporting system shall be comprised of the followings: Financial status reports, income statements, cash flow statements and explanatory notes on financial statements.
Operational reports, statistical reports and others intended for the management and administration of operations of microfinance institutions (including administrative accounting reports) shall not be covered by this Chapter.
1. Purposes of financial statements
Financial statement is designed for providing information about the financial status, business performance and cash flow of a microfinance institution, meeting administrative requirements of leadership of that microfinance institution, state regulatory authorities and user’s helpful demands concerning the making of economic decisions. Financial statement must provide the following information about a microfinance institution:
a. Assets;
b. Liabilities and equity;
c. Revenues and expenses;
d. Profits, losses and distribution of business income;
dd. Taxes and amounts payable to the State;
e. Other assets related to an accounting entity;
g. Cash flows of a microfinance institution.
In addition to such information, a microfinance institution must provide other relevant information in the “explanatory notes on the financial statement” in order to give additional interpretations about items inscribed on that financial statement and accounting policies already in effect to record economic transactions that may arise, prepare and represent that financial statement, and give more explanations about the degree of main financial exposures.
2. Responsibility for preparation, representation and signing of financial statements
Microfinance institutions shall be responsible for preparing annual financial statements and mid-year financial statements.
3. Requirements concerning preparation and representation of financial statements
a. Preparation and representation of financial statements must conform to requirements set out in the Accounting Standard No. 21 – “Representation of financial statements", including:
- Fairness and relevance;
- Selecting and applying accounting policies conforming to regulations of each accounting standard in order to ensure that provided information meets user’s needs in making economic decisions and provide reliable information, if:
+ Representation of financial statements is faithful and relevant to the financial status, business performance and business income of each enterprise;
+ Financial statements correctly reflect the economic nature, not simply the legal form, of transactions and events;
+ Financial statements are represented in a neutral and unbiased manner;
+ Representation of financial statements conforms to the prudence principle;
+ Financial statements are complete in all material respects.
b. A financial statement must be prepared based on data obtained after an accounting book is closed. A financial statement must be prepared based on correct information and according to the correct method, and must be represented in a manner of consistency between reporting periods. The financial statement must be signed by the preparer, chief accountant and legal representative of the accounting entity and stamped by the accounting entity. The signatory of a financial statement must take responsibility for its contents.
4. Principles of preparation and representation of financial statements
a. Preparation and representation of financial statements must conform to regulations set out in the Accounting Standard “Representation of financial statements" and other relevant accounting standards. Material information must be interpreted to help readers truly understand the financial status and conditions of each accounting entity.
b. Financial statements must focus more on the economic nature than on the legal form (respect the nature more than the form) of transactions and events.
c. Assets shall not be recognized with higher value than the recoverable value; liabilities shall not be recognized with the lower value than the value of debt obligations.
d. All accounts and items regarding revenues and expenses must be represented according to the relevance and prudence principle. Income statements and cash flow statements must record accounts and entries of revenue, income, expenses and cash flows in a reporting period. If there are errors affecting business results and cash flows in revenue, income and expenses arising in previous accounting periods, retroactive adjustments must be made while any adjustment in the reporting period is not allowed.
dd. Upon preparation of general-purpose financial statements between microfinance institutions and lower-level entities without legal personality for dependent accounting, balances of internal accounts and items in the financial status report, revenues, expenses, profits and losses deemed unrealized from intracompany transactions must be all removed.
5. Financial reporting period
5.1. Annual financial reporting period
Period of preparation of financial statements must coincide with the accounting period as provided in the Law on Accounting.
5.2. Mid-year financial reporting period
Period of preparation of mid-year financial statements must be a quarter of the fiscal year (except the fourth quarter).
5.3. Other financial reporting period
a. Microfinance institutions may choose to prepare financial statements in other accounting period as required by laws or upon the requests of owners.
b. Microfinance institutions that are split, separated, consolidated, acquired or transformed into other ownership forms, dissolved, terminated or go bankrupt shall be obliged to prepare financial statements at the time of splitting, separation, consolidation, acquisition or transformation into other ownership forms, dissolution, termination or insolvency.
6. Time limits for submission of financial statements
6.1. Annual financial statements
The audited annual financial statement enclosing the audit results given by independent auditing bodies (e.g. audit reports, audit management letters and other relevant documents) shall be submitted no later than 90 days from the date ending the fiscal year.
6.2. Mid-year financial statements
The mid-year financial statement shall be submitted no later than 30 beginning months of the subsequent quarter;
If the deadline for submission of a financial statement falls in a national holiday or weekend, the deadline for submission of a financial statement shall be extended to the following day.
7. Recipients of financial statements
a. Microfinance institutions whose charter capital is wholly owned by the State shall have to send their financial statements to the State Bank’s branches in provinces and centrally-affiliated cities where main offices of these microfinance institutions are located, State Bank of Vietnam (via Bank Supervision and Inspection Agency), Ministry of Finance (Banking Finance Department), tax agencies and statistics departments;
b. Other microfinance institutions shall have to send their financial statements to the State Bank’s branches in provinces and centrally-affiliated cities where main offices of these microfinance institutions are located, State Bank of Vietnam (via Bank Supervision and Inspection Agency), tax agencies and statistics departments.
8. Financial reporting system
8.1. Annual financial statements
a. Compulsory financial reports
- Financial status report | Form No. B01-TCVM |
- Income statement | Form No. B02-TCVM |
- Explanatory notes on the financial statement | Form No. B09-TCVM |
b. Non-compulsory, but advised, financial reports
- Cash flow statement | Form No. B03-TCVM |
8.2. Mid-year financial statements
a. Compulsory financial reports
- Mid-year financial status report | Form No. B01a-TCVM |
- Mid-year income statement | Form No. B02a-TCVM |
- Selective explanatory notes on the financial statement | Form No. B09a-TCVM |
b. Non-compulsory, but advised, financial reports
- Mid-year cash flow statement | Form No. B03a-TCVM |
Article 77. Instructions for preparation and presentation of financial statements
1. Contents and components of financial statements
Financial status report shall give a general overview of the financial conditions and situations of a microfinance institution at a specified time. Data of a financial status report indicate total value of existing assets of a microfinance institution according to the structure of assets and capital forming these assets. A financial status report may give overall comments and assessments about the financial status of a microfinance institution.
2. Bases for preparation of a financial status report
- General accounting books;
- Journals, vouchers or detailed spreadsheets
- The previous year’s financial status report. Data entered into the fourth column “Opening balances” in the current accounting period’s financial status report are based on those entered into the third column “Closing balances” of corresponding items in the previous period’s financial status report.
3. Contents and methods of selection of indices in the financial status report of a microfinance institution (Form No. B01-TCVM)
3.1. Assets (No. 100)
This is the general index measuring total value of assets existing in a microfinance institution at the reporting period, including: cash, deposits at the State Bank, deposits at credit institutions, investments, loans, receivables, fixed assets, project expenditures, inventories, capital work in progress, entrusted loans and other assets.
No. 100 = No. 110 + No. 120 + No. 130 + No. 140 + No. 150 + No. 155 + No. 160 + No. 170 + No. 180 + No. 190.
- Cash and cash equivalents (No. 110)
This is the general index measuring total cash available at hand at a microfinance institution on the reporting day, including: cash, deposits at the State Bank and deposits at credit institutions.
No. 110 = No. 111 + No. 112 + No. 113.
+ Cash (No. 111)
This is the index indicating total cash amount at hand at microfinance institutions at the reporting time. The index "Cash and cash equivalents" shall contain data on total balance on the Debit side of Account 101 “Cash”.
+ Deposits in the State Bank (No. 112)
This is the index indicating total existing deposit amounts of a microfinance institution in the State Bank at the reporting time. The index "Deposits at the State Bank" shall contain data on total balance on the Debit side of Account 110 “Deposits at the State Bank”.
+ Deposits in credit institutions (No. 113)
This is the index measuring total existing deposit amounts of a microfinance institution in credit institutions at the reporting time. The index shall contain data on total balance on the Debit side of Account 130 “Deposits at credit institutions”.
- Investments (No. 120)
This is the index reflecting total value of investments that a microfinance institution makes at the reporting time. Data input in this index shall be based on total balance on the Debit side of Account 121 - "Investments".
- Loans (No. 130)
This index shall reflect total value of loans granted by a microfinance institution at the reporting time (after provisions for loan losses have already been offset).
No. 130 = No. 131 + No. 132 + No. 133 + No. 134 + No. 139.
+ Lending (No. 131)
This index shall indicate total value of loans that a microfinance institution grants to credit institutions, or borrowing customers at the reporting time. Data input in this index shall be based on total balance on the Debit side of Account 201 - "Lending".
+ Lending of entrusted funds (No. 132)
This index shall reflect total value of loans that a microfinance institution grants by using its entrusted funds at the reporting time. Data input in this index shall be based on total balance on the Debit side of Account 251 - "Lending of entrusted funds".
+ Debts awaiting resolution (No. 133)
This index shall reflect total value of outstanding debts awaiting treatment measures of a microfinance institution at the reporting time. Data input in this index shall be based on total balance on the Debit side of Account 281 - "Debts awaiting resolution".
+ Charged-off loan debts (No. 134)
This index shall reflect total value of outstanding loan debts of a microfinance institution of which write-off is allowed at the reporting time. Data input in this index shall be based on total balance on the Debit side of the Account 291 - "Charged-off loan debts".
+ Provisions for loan losses (No. 139)
This index shall reflect provisions against loan risks that a microfinance institution sets up at the reporting time, including: Lending, lending of entrusted funds, outstanding debts awaiting resolution or charged-off debts. Data input in this index shall be total balance on the Credit side of Account 299 – “Provisions against loan risks” and must accept the negative numbers given in parentheses (…).
- Fixed assets (No. 140)
This index shall reflect total residual value (Historical cost minus cumulative depreciation value) of fixed assets of a microfinance institution at the reporting time.
No. 140 = No. 141 + No. 144 + No. 147.
- Tangible fixed assets (No. 141)
This index shall reflect total residual value of tangible fixed assets at the reporting time.
No. 141 = No. 142 + No. 143.
+ Historical costs of fixed assets (No. 142)
This index shall reflect total historical cost of tangible fixed assets at the reporting time. Data input in this index shall be total balance on the Debit side of Account 301 “Tangible fixed assets”.
+ Cumulative depreciation value (No. 143)
This index shall reflect total depreciation value of tangible fixed assets accumulated till the reporting time. Data input in this index shall be total balance on the Credit side of Account 305 “Fixed asset depreciation” and must accept the negative numbers given in parentheses (…).
- Fixed assets hired under finance leases (No. 144)
This index shall reflect total residual value of fixed assets hired under finance leases till the reporting time.
No. 144 = No. 145 + No. 146.
+ Historical costs of fixed assets (No. 145)
This index shall reflect total historical cost of fixed assets hired under finance leases at the reporting time. Data input in this index shall be total balance on the Debit side of Account 303 “Fixed assets hired under finance leases”.
+ Cumulative depreciation value (No. 146)
This index shall reflect total depreciation value of fixed assets hired under finance leases at the reporting time. Data input in this index shall be total balance on the Credit side of Account 305 “Fixed asset depreciation” and must accept the negative numbers given in parentheses (…).
- Intangible fixed assets (No. 147)
This index shall reflect total residual value of intangible fixed assets at the reporting time.
No. 147 = No. 148 + No. 149.
+ Historical costs of fixed assets (No. 148)
This index shall reflect total historical cost of intangible fixed assets at the reporting time. Data input in this index shall be total balance on the Debit side of Account 302 “Intangible fixed assets”.
+ Cumulative depreciation value (No. 149)
This index shall reflect total depreciation value of intangible fixed assets accumulated till the reporting time. Data input in this index shall be total balance on the Credit side of Account 305 “Fixed asset depreciation” and must accept the negative numbers given in parentheses (…).
- Other assets (No. 150)
This index shall reflect total value of other assets at the reporting time, including prepaid expenses, security deposits, collateral, pledges, deductible VAT and other assets that have not already been mentioned in other indices, at the reporting time.
No. 150 = No. 151 + No. 152 + No. 153 + No. 154.
+ Prepaid expenses (No. 151)
This index shall reflect amounts paid in advance for services and goods; goodwill and other business advantages that have not yet been distributed into expenses at the reporting time. Data input in this index shall be total balance on the Debit side of Account 381 “Other assets”.
+ Security deposits, collateral and pledges (No. 152)
This index shall reflect amounts that a microfinance institution gives as deposits, collateral or pledges till the reporting time. Data input in this index shall be total balance on the Debit side of Account 381 “Other assets”.
+ Deductible VAT amounts (No. 153)
This index shall reflect the remaining VAT amount deduction that a microfinance institution is granted at the reporting time. Data input in this index shall be total balance on the Debit side of Account 353 “Deductible VAT”.
+ Other assets (No. 154)
This index shall reflect total value of assets other than those stated above at the reporting time. Data input in this index shall be total balance on the Debit side of Account 381 “Other assets”, total balance on the Debit side of Account 453 – Taxes and other payables to the State.
- Project expenditures (No. 155)
This index shall reflect total project expenditures that a microfinance institution incurs till the reporting time. Data input in this index shall be total balance on the Debit side of Account 366 “Project expenditures”.
- Receivables (No. 160)
This index shall reflect total value of amounts receivable at the reporting time, including: Receivables from outside of microfinance institutions, interest and fees receivable, other receivables after subtracting provisions for loss of receivables.
No. 160 = No. 161 + No. 162 + No. 163 + No. 164 + No. 169.
+ Receivables from outside of microfinance institutions (No. 161)
This index shall reflect the remaining amounts to be received from external organizations and individuals at the reporting time. Data input in this index shall be based on total balance on the Debit side of Account 351 “Receivables from the outside" and total balance on the Debit side of Account 451 “Payables to the outside”.
+ Interest and fees receivable (No. 162)
This index shall indicate the remaining interest and fee amounts that a microfinance institution will collect at the reporting time. Data input in this index shall be based on total balance on the Debit side of Account 391 “Interest and fees receivable”.
+ Intracompany receivables (No. 163)
This index shall reflect amounts receivable inside of a microfinance institution at the reporting time. Data input in this index shall be total balance on the Debit side of Account 519 “Intracompany payments”.
A microfinance institution must prepare a financial status report by collecting data from all of its affiliates without legal personality and must ensure that all data arising from intracompany transactions between higher-level units and lower-level units, and amongst lower-level units, must be eliminated. This index shall be complemented and reduced by the index “Intracompany payables” in the financial status report of an affiliate without legal personality. This index shall not be presented in the general financial status report of a microfinance institution.
+ Other receivables (No. 164)
This index shall reflect other receivables, such as advances, collections and payments on behalf of customers at the reporting time. Data input in this index shall be total balance on the Debit side of Account 362 “Other receivables”, total balance on the Debit side of Account 451 “Payables to the outside”, total balance on the Debit side of Account 461 “Payables to employees” and total balance on the Debit side of Account 462 “Other payables”.
+ Provisions for loss of receivables (No. 169)
This index shall measure provisions for loss of receivables, such as provisions for receivables from the outside, provisions for loss of interest and fee amounts at the reporting time. Data input in this index shall be based on total balance on the Credit side of Account 359 – “Provisions for loss of receivables” and must accept the negative numbers given in parentheses (…).
- Inventories (No. 170)
This index shall reflect total existing value of goods in stock under the ownership of a microfinance institution at the reporting time.
No. 170 = No. 171 + No. 172.
+ Tools and instruments (No. 171)
This index shall reflect total value of tools and instruments of a microfinance institution at the reporting time. Data input in this index shall be based on total balance on the Debit side of Account 311 “tools and instruments”.
+ Raw materials (No. 172)
This index shall reflect total value of raw materials in stock at a microfinance institution at the reporting time. Data input in this index shall be total balance on the Debit side of Account 313 “Raw materials”.
- Capital work-in-progress (No. 180)
This index shall reflect total costs incurred from implementation of capital construction projects (including costs of purchase of fixed assets, new construction, repair, Renovation, expansion or technical refurbishment of facilities) of a microfinance institution at the reporting time. Data input in this index shall be total balance on the Debit side of Account 321 “Capital work-in-progress”.
- Lending entrustment (No. 190)
This index shall reflect total loan amounts that a microfinance institution entrusts at the reporting time. Data input in this index shall be based on total balance on the Debit side of Account 382 “Lending entrustment”.
3.2. Liabilities (No. 200)
This index shall reflect all debts that need to be repaid at the reporting time, including: Borrowing of funds from individuals, credit institutions or other entities, customer s deposits, entrusted loans, payables to the outside, interest and fee amounts payable, taxes and other amounts payable to the State, payables to employees, intracompany payables, other payables, provisions for payables, project funding sources and other funds of a microfinance institution.
No. 200 = No. 210 + No. 220 + No. 230 + No. 240 + No. 250 + No. 260 + No. 270 + No. 280 + No. 290.
- Borrowing of funds from individuals, credit institutions and other entities (No. 210)
This index shall reflect total amounts that a microfinance institution lends from individuals, credit institutions and other entities at the reporting time. Data input in this index shall be based on total balance on the Credit side of Account 415 “Borrowing of funds from persons, credit institutions and other entities”.
- Customer’s deposits (No. 220)
This index shall reflect sums that customers are deposited at a microfinance institution at the reporting time. Data input in this index shall be based on total balance on the Credit side of Account 420 “Customer’s deposits”.
- Entrusted loans (No. 230)
This index shall reflect total amounts entrusted to a microfinance institution by the Government, economic organizations and individuals as loans to customers at the reporting time. Data input in this index shall be based on total balance on the Credit side of Account 441 “Entrusted loans”.
- Taxes and amounts payable to the State (No. 240)
This index shall reflect total amounts that a microfinance institution has to pay the State at the reporting time, including taxes, fees, charges and other payables. Data input in this index shall be based on total balance on the Credit side of Account 453 “Taxes and amounts payable to the State”.
- Payables to employees (No. 250)
This index shall reflect total amounts that a microfinance institution has to pay employees at the reporting time. Data input in this index shall be based on total balance on the Credit side of Account 461 “Payables to employees”.
- Provisions for payables (No. 260)
This index shall reflect provisions for estimated amounts that have to be paid by a microfinance institution at the reporting time, such as accrued expenses for the periodic repair of fixed assets, provisions for payables on obligations related to a microfinance institution, etc. Provisions for payables are usually estimated and uncertain about the repayment deadline and value. Data input in this index shall be based on total balance on the Credit side of Account 471 “Provisions for payables”.
- Payables (No. 270)
This index shall reflect total amounts that a microfinance institution needs to pay at the reporting time, including: Payables to the outside, interest and fee amounts payable, intracompany payables, security collateral, deposits, accrued expenses and other payables.
No. 270 = No. 271 + No. 272 + No. 273 + No. 274.
+ Payables to the outside of microfinance institutions (No. 271)
This index shall indicate total amounts that a microfinance institution has to pay externally at the reporting time. Data input in this index shall be based on total balance on the Credit side of Account 451 “Payables to the outside”.
+ Interest and fee amounts payable (No. 272)
This index shall reflect the interest and fee amounts that a microfinance institution has to pay at the reporting time. Data input in this index shall be based on total balance on the Credit side of Account 491 “Interest and fee amounts payable”.
+ Intracompany payables (No. 273)
This index shall reflect amounts that a microfinance institution has to pay internally at the reporting time. Data input in this index shall be total balance on the Credit side of Account 519 “Intracompany payments”.
A microfinance institution must prepare a financial status report by collecting data from all of its affiliates without legal personality and must ensure that all data arising from intracompany transactions between higher-level units and lower-level units, and amongst lower-level units, must be eliminated. This index shall be complemented and reduced by the index “Intracompany receivables” in the financial status report of an affiliate without legal personality. This index shall not be presented in the general financial status report of a microfinance institution.
+ Other payables (No. 274)
This index shall reflect all of other amounts that a microfinance institution has to pay at the reporting time, including: Received security deposits, collateral, accrued expenses and other payables, etc.
No. 274 = No. 274a + No. 274b + No. 274c.
. Received security collateral and deposits (No. 274a)
This index shall reflect total value of amounts that a microfinance institution receives as security collateral or deposits at the reporting time. Data input in this index shall be based on total balance on the Credit side of Account 462 “Other payables”.
. Accrued expenses (No. 274b)
This index shall reflect total value of debts that have to be repaid for receipt of goods or services, but have not yet been invoiced, or of expenses in the reporting period without adequate documents and materials that are certain and need to be charged in advanced into business expenses at the reporting time. Data input in this index shall be based on total balance on the Credit side of Account 462 “Other payables”.
. Other payables (No. 274c)
This index shall reflect total value of other amounts that a microfinance institution has to pay at the reporting time. Data input into this index shall be based on total balance on the Credit side of Account 462 “Other payables”, total balance on the Credit side of Account 351 “Receivables from the outside” and total balance on the Credit side of Account 362 “Other receivables”.
- Project funding sources (No. 280)
This index shall reflect total funds for projects of a microfinance institution. Data input in this index shall be based on total balance on the Credit side of Account 466 “Project funding sources”.
- Funds of microfinance institutions (No. 290)
This index shall reflect microfinance institution’s funds, including: Reward and welfare funds, science and technology development funds.
No. 290 = No. 291 + No. 292.
+ Reward and welfare funds (No. 291)
This index shall reflect amounts in reward funds and welfare funds that have not yet been used at the reporting time. Data input in this index shall be based on total balance on the Credit side of Account 484 “Reward and welfare funds”.
+ Science and technology development funds (No. 292)
This index shall reflect total value of a science and technology development fund currently available for use at the reporting time. Data input in this index shall be based on total balance on the Credit side of Account 483 – Science and technology development funds.
3.3. Equity (No. 300)
This index shall reflect owner investments, funds established by setting aside part of after-tax profits, undistributed after-tax profits, differences upon asset revaluation, exchange differences, etc.
No. 300 = No. 310 + No. 320 + No. 330 + No. 340 + No. 350 + No. 360.
- Owner investments (No. 310)
This index shall reflect total capital actually contributed by owners to microfinance institutions. Data input in this index shall be based on total balance on the Credit side of Account 601 "Owner investments”.
- Differences upon asset revaluation (No. 320)
This index shall reflect total differences arising from revaluation of assets that are directly recorded into the equity existing at the reporting time. Data input in this index shall be based on total balance on the Credit side of Account 631 “Difference upon asset revaluation”. If the Account 631 has the balance on the Debit side, this index shall be recorded by the negative numbers given in parentheses (…).
- Development investment funds (No. 330)
This index shall reflect total amounts in the development investment fund that have not yet been used at the reporting time. Data input in this index shall be based on total balance on the Credit side of Account 612 “Development investment funds”.
- Financial reserve funds (No. 340)
This index shall reflect total amounts in the financial reserve fund that have not yet been used at the reporting time. Data input in this index shall be based on total balance on the Credit side of Account 613 “Financial reserve funds”.
- Reserve funds for supplementing the charter capital (No. 350)
This index shall reflect total amounts in the reserve fund for supplementing the charter capital that have not yet been used at the reporting time. Data input in this index shall be based on total balance on the Credit side of Account 611 “Reserve funds for supplementing the charter capital”.
- Undistributed after-tax profits (No. 360)
This index shall reflect after-tax profits (or losses) that have not yet been distributed at the reporting time. Data input in this index shall be based on total balance on the Credit side of Account 691 “Undistributed after-tax profits”. If the Account 691 has the balance on the Debit side, this index shall be recorded by using the negative numbers given in parentheses (…).
- Total capital (No. 400)
This index shall reflect all capital sources, including: liabilities and owner equity of a microfinance institution at the reporting period.
No. 400 = No. 200 + No. 300.
Article 78. Methods of preparation of income statements (Form No. B02-TCVM)
1. Contents and components of income statements
a. Income statements shall reflect within-period business performance and results of the following operations, including credit operations, service operations and other operations, etc.
b. Each income statement shall have 5 columns:
- First column: Reporting indicators;
- Second column: Numbers of corresponding indicators;
- Third column: Codes of corresponding indicators presented in the explanatory notes on the financial statement;
- Fourth column: Total amounts arising within an accounting year;
- Firth column: Previous year’s data (for comparison purposes). Data entered into the fifth column “Previous year” (for comparison purposes) in the current accounting period’s income statement are based on those entered into the fourth column “Current year” of corresponding items in the previous period’s income statement.
2. Reporting bases
- Previous-period income statement;
- General ledger and journal within the reporting period used for recording entries in class-7 revenue accounts, class-8 expense accounts and account 001 - Determination of business results.
3. Contents and methods of selection of items in an income statement
3.1. Net profit/loss from credit operations (No. 03)
This index shall reflect total income from interest earned from credit operations and equivalent income minus loan interest costs and costs directly related to credit operations after revenue deductions are taken away from these costs (if any).
No. 03 = No. 01 - No. 02.
- Revenues generated from credit operations (No. 01)
This index shall reflect the aggregation of revenues from deposit interest, loan interest (microfinance institutions directly grant loans), interest earned from debt trading activities after revenue deductions have been taken away from such interest (if any) within the reporting period.
Data input in this index shall be based on the balance on the Debit side of Account 701 “Revenues from credit operations” versus the corresponding and opposite balance on the Credit side of Account 001 “Determination of business results”.
- Expenses incurred from credit operations (No. 02)
This index shall reflect loan interest costs, savings interest costs, costs directly related to deposit and savings mobilization and costs of credit operations (including costs of preservation and protection of customer’s deposits and savings) charged into expenses within the accounting period. This index shall not encompass costs of provisions against loan losses presented in the index “Provision costs” (No. 15).
Data input in this index shall be based on the balance on the Credit side of Account 801 “Expenses for credit operations” versus the corresponding and opposite balance on the Debit side of Account 001 “Determination of business results”.
3.2. Net profit/loss from credit operations (No. 06)
This index shall reflect net profit/loss from services, including receipts from such services as payment service, cashier service, purchases and payments on behalf of customers, receipt of entrusted loans, financial consulting service, insurance agent service and other receipts from other services after revenue deductions and costs directly related to service operations have already been taken away from these receipts within the reporting period.
No. 06 = No. 04 - No. 05.
- Revenues generated from service operations (No. 04)
This index shall reflect total service revenues from which revenue deductions (if any) have already been taken away, including: Receipts from payment, cashier services, purchases and payments on behalf of customers, receipt of entrusted loans, financial consulting service, insurance agent service and other receipts from other services that arise within the reporting period.
Data input in this index shall be based on the balance on the Debit side of Account 711 “Revenues from service operations” versus the corresponding and opposite balance on the Credit side of Account 001 “Determination of business results”.
- Expenses for service operations (No. 05)
This index shall reflect expenses for service operations related to payments, purchases and payments on behalf of customers, receipt of entrusted loans, financial consulting services, insurance agent services and other receipts from other services that arise within the reporting period.
Data input in this index shall be based on the balance on the Credit side of Account 811 “Expenses for service operations” versus the corresponding and opposite balance on the Debit side of Account 001 “Determination of business results”.
3.3. Profit/loss from other operations (No. 09)
This index shall reflect the amount of profits/losses from other operations (except revenues from specialized operations of microfinance institutions) from which expenses for other operations have been taken away within the reporting period.
No. 09 = No. 07 - No. 08.
- Revenues generated from other operations (No. 07)
This index shall reflect total revenues from other operations from which permitted deductions (if any) have already been taken away within the reporting period.
Data input in this index shall be based on the balance on the Debit side of Account 741 “Revenues from other operations” versus the corresponding and opposite balance on the Credit side of Account 001 “Determination of business results”.
- Expenses for other operations (No. 08)
This index shall reflect total expenses for other operations arising within the reporting period.
Data input in this index shall be based on the balance on the Credit side of Account 841 “Expenses for other operations” versus the corresponding and opposite balance on the Debit side of Account 001 “Determination of business results”.
3.4. Administrative expenses (No. 10)
This index shall reflect total administrative expenses arising within the reporting period. Data input in this index shall be based on the balance on the Credit side of Account 851 “Administrative expenses” versus the corresponding and opposite balance on the Debit side of Account 001 “Determination of business results”.
3.5. Other profits (No. 13)
This index shall reflect the amount of profits/losses from other operations of microfinance institutions (except profits/losses from credit and service operations) from which other expenses have been taken away within the reporting period.
No. 13 = No. 11 - No. 12.
- Other revenues (No. 11)
This index shall reflect total revenues from other operations from which permitted deductions (if any) have already been taken away within the reporting period.
Data input in this index shall be based on the balance on the Debit side of Account 791 “Other revenues” versus the corresponding and opposite balance on the Credit side of Account 001 “Determination of business results”.
- Other expenses (No. 12)
This index shall reflect total expenses for other operations arising within the reporting period.
Data input in this index shall be based on the balance on the Credit side of Account 891 “Other expenses” versus the corresponding and opposite balance on the Debit side of Account 001 “Determination of business results”.
3.6. Net profits from business operations before addition of expenses for provisions against credit risk (No. 14)
This index shall reflect total profits from business operations that a microfinance institution earns within the reporting period before expenses for provisions against credit risk arise in that period.
No. 14 = No. 03 + No. 06 + No. 09 - No. 10.
3.7. Provision costs (No. 15)
This index shall reflect provision costs arising within the reporting period. Data input in this index shall be the balance on the Credit side of Account 881 “Provision costs” (specified in the detailed journal of costs of provisions against lending risks, provisions for loss of receivables and provisions for payables) versus the corresponding and opposite balance on the Debit side of Account 001 “Determination of business results”.
3.8. Gross profits before tax (No. 16)
This index shall reflect total profits in the balance sheet before expenses incurred from CIT have been deducted from such profits within the reporting period.
No. 16 = No. 14 - No. 15.
3.9. CIT expenses (No. 17)
This index shall reflect total expenses incurred from CIT within the reporting period.
Data input in this index shall be based on the balance on the Credit side of Account 831 “CIT expenses” versus the corresponding and opposite balance on the Debit side of Account 001 “Determination of business results”.
3.10. Profits after tax (No. 18)
This index shall reflect total net profits (or net losses) after CIT arises within the reporting period.
No. 18 = No. 16 - No. 17.
Article 79. Contents and methods of preparation and presentation of cash flow statements (Form No. B03-TCVM)
1. Principles of preparation and representation of cash flow statements
a. Preparation and presentation of annual and mid-year cash flow statements must conform to regulations laid down in the Accounting Standard "Cash flow statements” and "Mid-year financial statements”. As for indices without data that do not need to be presented, microfinance institutions may rearrange, but shall not be allowed to change, the numbers of these indices.
b. Microfinance institutions shall have to present cash flows relevant to three following operations in a cash flow statement: Business, investment and financial operations as prescribed in the accounting standard “Cash flow statements”.
c. Microfinance institutions shall be entitled to present cash flows from business, investment and financial operations in the form most relevant to their business characteristics.
d. Cash flows arising from business, investment and financial operations as mentioned hereunder shall be reported on a net basis:
- Collecting and paying sums on behalf of customers, such as sums collected and paid on behalf of customers and returned to property owners;
- Collecting and paying sums with respect to items with high turnover ratios and short maturity periods, including: Purchases and sales of investments; short-term borrowed funds or loans with the maximum maturity period of 3 months.
dd. Cash flows arising from transactions in foreign currencies must be converted into official currencies used for the purposes of bookkeeping and preparation of financial statements at the forex rates quoted at the transaction time.
e. Investment and finance-related transactions that do not directly involve cash or cash equivalents shall not be presented in cash flow statements.
g. Cash and cash equivalents at the beginning and end of a reporting period, and impacts resulting from changes in foreign exchange rates used for conversion of cash and cash equivalents in foreign currencies at end of the reporting period, must be presented in separate indices included in cash flow statements so as to compare data with those in corresponding items on financial status reports.
h. Microfinance institutions must present values of and reasons for cash and cash equivalents with high closing balances which are at their hand but are prohibited from use due to restrictions imposed by laws or other binding clauses that they have to obey.
i. In case where amounts arise from clearing and settlement activities involved by the same person, cash flow statements shall be represented under the following rules:
- If the clearing and settlement process is related to transactions classified in the same cash flow, the cash flow statement shall be presented on a net basis (for example, asymmetric barter transactions, etc.);
- If the clearing and settlement process is related to transactions classified in different cash flows, microfinance institutions shall not be entitled to present cash flow statements on a net basis, but shall have to present them in separate values of these transactions (for example, clearing and settlement between sums receivable from sale of goods and borrowed funds, etc.).
2. Bases for preparation of cash flow statements
Cash flow statements shall be prepared based on:
- Financial status reports;
- Income statements;
- Explanatory notes on the financial statement;
- Previous-period cash flow statements;
- Other accounting records such as ledgers and journals recording such accounts as “Cash”, “Deposits at the State Bank”, “Deposits at credit institutions”; ledgers and journals recording other relevant accounts, spreadsheets for calculation and distribution of depreciation on fixed assets and other detailed accounting records, etc.
3. Contents and methods of writing of indices in annual cash flow statements
3.1. Cash flows from business operations
- Interest income and other equivalent income received (No. 01)
This index shall be written based on total sums gained from interest income and other equivalent incomes received from credit institutions of microfinance institutions within the reporting period.
Data input in this index shall come from the index “Revenues from credit operations” (No. 01) in the income statement. If these data have negative numbers (in case of loss), the numbers must be given in parentheses (...).
- Interest expenses and other equivalent expenses already paid (No. 02)
This index shall be written based on total interest payments and other equivalent expenses for credit operations of microfinance institutions within the reporting period.
Data input in this index may come from the index “Expenses for credit operations” (No. 02) in an income statement. Data in this index must be the negative numbers given in parentheses (…).
- Receipts from service operations (No. 03)
This index shall be written based on total receipts already collected from service operations of microfinance institutions within the reporting period.
Data input in this index shall come from the index “Revenues from service operations” (No. 04) in an income statement. If these data have negative numbers (in case of loss), the numbers must be given in parentheses (...).
- Sums paid for service operations (No. 04)
This index shall be written based on total interest payments and other equivalent expenses for service operations of microfinance institutions within the reporting period.
Data input in this index may come from the index “Expenses for service operations” (No. 05) in an income statement. Data in this index must be the negative numbers given in parentheses (…).
- Receipts from debts charged off or offset by provisions against risks (No. 05)
This index shall be written based on total sums already collected from debts charged off or offset by provisions against risks of microfinance institutions within the reporting period.
Data input in this index shall be based on sums collected and recorded as revenues from debts charged off or offset by provisions against risks, and monitored outside of the balance sheet.
- Sums paid to employees (No. 06)
This index shall be written based on total sums already paid to employees within the reporting period, including salaries, wages, allowances, bonuses, etc. that microfinance institutions have paid or paid in advance.
Data input in this index shall come from cash accounts in accounting books after being compared with those in the Account 461 (details of sums already paid in cash) within the reporting period. Data in this index must be the negative numbers given in parentheses (…).
- CIT sums already paid (No. 07)
This index shall be written based on total CIT sums already paid to the State within the reporting period, including CIT sums already paid in the present period, outstanding CIT sums in the previous periods already paid in the present period, and CIT sums paid in advance (if any).
Data input in this index shall come from accounts in accounting books, such as cash accounts (details of CIT sums payable) after being collated with details of Account 453 in accounting books. This index shall accept the negative numbers given in parentheses (…).
- Receipts from other operations (No. 08)
This index shall be written based on total sums received from other operations of microfinance institutions within the reporting period.
Data input in this index may come from the index “Revenues from other operations” (No. 07) in an income statement. If these data have negative numbers (in case of loss), the numbers must be given in parentheses (...).
- Sums paid for other operations (No. 09)
This index shall be written based on total sums already paid for interest and equivalent expenses for other operations of microfinance institutions within the reporting period.
Data input in this index may come from the index “Expenses for other operations” (No. 08) in an income statement. Data in this index must be the negative numbers given in parentheses (…).
- Net cash flows from business operations before changes in assets and working capital (No. 20)
This index shall reflect the difference in total sums received and total sums paid from business operations before assets and working capital are changed at microfinance institutions within the reporting period. Data input in this index may be the aggregation of data of the index No. 01 through No. 09. If the numbers are negative, they must be given in parentheses (…).
No. 20 = No. 01 + No. 02 + No. 03 + No. 04 + No. 05 + No. 06 + No. 07 + No. 08 + No. 09.
- Increases/decreases in deposits and loans (No. 21)
This index shall be written based on the difference between the deposit and loan amounts of microfinance institutions in the current period and those in the previous period.
Data input in this index shall come from the following indices: Deposits at the State Bank (No. 112), Deposits at credit institutions (No. 113) and Loans (No. 130) in the financial status report. If data in this index are the negative numbers, these numbers must be given in parentheses (…).
- Decreases in provision sums for losses (No. 22)
This index shall be used on the basis of the amounts of provisions used for compensating for losses within the reporting year.
- Other increases/decreases in working assets (No. 23)
This index shall be written based on the difference between the current-period and previous-period sums in two indices “Other assets” (No. 150), “Receivables” (No. 160) in the financial status report of a microfinance institution which adjusts profits/losses arising cumulative exchange differences that are not carried forward to revenues/expenses, or adjusts profits/losses upon asset revaluation. If data in this index are the negative numbers, these numbers must be given in parentheses (…).
- Increases/(Decreases) in deposit sums in the custody of and loan sums granted by credit institutions (No. 24)
This index shall be written based on the difference between current-period and previous-period amounts in the index “Borrowing of funds from individuals, credit institutions and other entities” (No. 210) in the financial status report.
- Increases/(Decreases) in customer’s deposits (No. 25)
This index shall be written based on the difference between current-period and previous-period amounts in the index “Customer’s deposits” (No. 211) in the financial status report.
- Increases/(Decreases) in entrusted loans (No. 26)
This index shall be written based on the difference between current-period and previous-period amounts in the index “Capital received as entrusted loans” (No. 212) in the financial status report.
- Other Increases/(Decreases) in operating public debts (No. 27)
This index shall be written based on the difference between current-period and previous-period amounts in the index “Payables to the outside” (No. 213) and the index “Other payables” (No. 217) in the financial status report (exclusive of sums payable to employees and expense sums payable).
- Sums taken out of funds (No. 28)
This index shall be written based on sums taken out of funds for spending within the reporting period. Data input in this index shall be based on the difference between amounts at the end and at the beginning of the accounting year in the index "Funds of microfinance institutions" (No. 223).
- Net cash flows from business operations (No. 30)
This index shall reflect the difference in total sums received in and total sums paid out from business operations after adjustments in changes in assets and working capital of microfinance institutions within the reporting period. Data input in this index may be the aggregation of data of the index No. 01 through No. 28. If the numbers are negative, they must be given in parentheses (…).
No. 30 = No. 20 + No. 21 + No. 22 + No. 23 + No. 24 + No. 25 + No. 26 + No. 27 + No. 28.
3.2. Cash flows from investment operations
- Sums spent on purchases and construction of fixed assets (No. 31)
This index shall be written based on total sums actually paid out for purchases and construction of tangible fixed assets, intangible fixed assets and payment sums in the phase of implementation of these assets which have been capitalized into intangible fixed assets within the reporting account.
Data input in this index shall come from bookkeeping accounts such as cash account (details of sums spent on purchases and construction of fixed assets), receivables account (detailed of collection of debts promptly paid in purchase activities), Account 451 (details of repayment of debts to sellers of fixed assets) after being collated with Accounts 301, 302, 303 and 305 within the reporting period. Data input in this index must be the negative numbers given in parentheses (…).
- Receipts from liquidation and disposal of fixed assets (No. 32)
This index shall be written based on the net sums already collected from liquidation and disposal of tangible fixed assets or intangible fixed assets within the reporting period, even including the sums gained from recovery of outstanding receivables directly related to the liquidation and disposal of fixed assets.
This index shall not encompass amounts of receipts from nonmonetary assets or sums receivable but not yet collected within the reporting period from the liquidation and disposal of fixed assets.
Data input in this index shall be the difference between sums received from and sums paid for the liquidation and disposal of fixed assets. Received sums shall come from such bookkeeping accounts as cash account after being collated with bookkeeping accounts such as Account 791 and 351 (details of receipts from the liquidation and disposal of fixed assets) within the reporting period. Paid sums shall come from such bookkeeping accounts as Account 101 after being collated with Account 891 (details of payments for the liquidation and disposal of fixed assets) within the reporting period. Data input in this index must be the negative numbers given in parentheses (…) if the sum actually collected is less than the sum actually paid.
- Net cash flows from investment operations (No. 35)
This index shall reflect the difference between total sums received from and total sums paid for investment operations within the reporting period. If data in this index are the negative numbers, these numbers must be given in parentheses (…).
No. 35 = No. 31 + No. 32.
3.3. Cash flows from financial operations
- Receipts from acquisition of owner’s paid-in capital (No. 36)
This index shall be written based on total sums actually contributed as owner’s paid-in capital within the reporting period.
This index shall not encompass borrowed funds and debts transformed into capital, undistributed after-tax profits transformed into capital or receipts from owner s capital contributions via nonmonetary assets.
Data input in this index shall come from cash accounts after being collated with those in the Account 601 within the reporting period.
- Sums used for repaying paid-in capital to owners (No. 37)
This index shall be written based on total sums already repaid owing to reimbursement of paid-in capital to owners in the monetary form within the reporting period.
This index shall not encompass sums used for repaying paid-in capital to owners by using nonmonetary assets or sums used as contributed capital for compensation for business losses.
Data input in this index shall come from cash accounts after being collated with those in the Account 601 within the reporting period. Data input in this index must be the negative numbers given in parentheses (…).
Net cash flows from financial operations (No. 40)
This index shall reflect the difference between total sums received from and total sums paid for financial operations within the reporting period. If data in this index are the negative numbers, these numbers must be given in parentheses (…).
No. 40 = No. 36 + No. 37.
3.4. Consolidation of cash flows within the reporting period
- Net cash flows within the reporting period (N0. 50)
The index “Net cash flows within the reporting period" shall reflect the difference between total sums received from and total sums paid for three operations, including business, investment and financial operations, of microfinance institutions within the reporting period. If data in this index are the negative numbers, these numbers must be given in parentheses (…).
No. 50 = No. 30 + No. 35 + No. 40.
- Cash and cash equivalents at the beginning of the reporting period (No. 60)
This index shall be written based on data in the index “Cash” in the beginning of the reporting period (No. 110, column “Opening balance” in the financial status report).
- Impacts resulting from changes in exchange rates for foreign currency conversion (No. 61)
This index shall be written based on total exchange difference upon revaluation of the closing balance of cash and cash equivalents in foreign currencies (No. 110 in the financial status report) at the end of the reporting period.
Data input in this index shall come from cash and related accounts (details of items defined as cash equivalents) after being compared with those in the Account 641 within the reporting period. Data input in this index must be the positive numbers if foreign exchange profits are gained. On the contrary, such data must be the negative numbers given in parentheses (…) if foreign exchange losses arise.
- Cash and cash equivalents at the end of the reporting period (No. 70)
This index shall be written based on data in the index “Cash” at the end of the reporting period (No. 110, column “Closing balance” in the financial status report).
No. 70 = No. 50 + No. 60 + No. 61.
Article 80. Contents and methods of preparation and presentation of explanatory notes on the financial statement (Form No. B09-TCVM)
1. Purposes of explanatory notes on the financial statement:
a. Explanatory notes on the financial statement refer to an integral part of a financial statement used for the narrative description or detailed analysis of data and information presented in financial status reports, income statements and cash flow statements as well as other necessary information in conformity with requirements set out in specific accounting standards.
b. Explanatory notes on the financial statement may also present other information if microfinance institutions consider them necessary for the fair and rational representation of a financial statement.
2. Principles of preparation and representation of explanatory notes on financial statements
a. Upon preparation of financial statements, microfinance institutions must give explanatory notes on these financial statements in compliance with the Accounting Standard “Presentation of financial statements” and instructions given herein.
b. Upon preparation of mid-year financial statements, microfinance institutions must give explanatory notes on these financial statements in compliance with the Accounting Standard “Presentation of mid-year financial statements” and Circulars providing instructions about this standard.
c. Explanatory notes on financial statements of microfinance institutions must comprise the following contents:
- Information about bases for preparation and presentation of financial statements and specific accounting policies selected and applied in important transactions and events;
- Representation of information included in accounting standards that has not yet been presented in other financial statements (material information);
- Provision of additional information which has not yet been presented in other financial statements, but is necessary for the truthful and rational representation of the financial status of microfinance institutions.
d. Explanatory notes on financial statements must be presented in a logical manner. Microfinance institutions may, on their own, decide to arrange the ordinal numbers in explanatory notes on financial statements in the form most relevant to their business characteristics according to the principles under which each item in a financial status report, income statement or cash flow statement needs to be hyperlinked to related information in these explanatory notes.
3. Bases for preparation of explanatory notes on financial statements
a. Financial status reports, income statements and cash flow statements;
b. General ledgers, accounting journals and vouchers or relevant detailed spreadsheets;
c. Previous-year explanatory notes on financial statements;
d. Actual conditions of microfinance institutions and other relevant documents.
4. Contents and methods of selection of indices
4.1. Business characteristics of microfinance institutions
In this section, microfinance institutions should give detailed information about:
(1) Establishment and operation license and its validity period;
(2) Capital contribution form and membership;
(3) Members of Managing Board/ Board of Members (name and title of each member);
(4) Members of Board of General Directors/Directors (name and title of each member);
(5) Operating locations;
(6) Main office; transaction offices;
(7) Total of officers and employees.
4.2. Accounting period and currency unit
(1) Accounting year must be the calendar year starting from January 1,… to December 31,… If a microfinance institution accepts the fiscal year other than the calendar year, start date and end date of the accounting year must be clearly informed.
(2) Accounting currency unit: Clearly specifying Vietnamese dong or another currency selected in accordance with the Law on Accounting.
4.3. Applied Accounting Standards and Regimes
(1) Applied accounting regime: Clearly informing which accounting regime is applied by a microfinance institution.
(2) Declaration of compliance with the applied accounting standard and regime: Clearly confirming whether the financial statement is prepared and presented in conformance to Vietnamese Accounting Standards and Regimes? A financial statement shall be deemed neutral and conforming to Vietnamese Accounting Standards and Regimes if it complies with regulations set out in each standard and circular providing instructions on implementation of Accounting Standards and Regimes that microfinance institutions are applying. In case none of accounting standards is applied, this case must be specified clearly.
4.4. Applied accounting policies
(1) Foreign exchange rates used for accounting purposes
- Commercial banks whose forex rates are chosen;
- Forex rates applied upon recognition and revaluation of assets;
- Forex rates applied upon recognition and revaluation of liabilities;
- Forex rates applied in other transactions.
(2) Principles of recognition of loans:
- Principles of recognition of lending of funds from operating capital of microfinance institutions;
- Principles of recognition of loans from entrusted funds;
- Principles of classification of debts and setting aside of funds for provisions against risks; write-off of unrecoverable loans.
(3) Principles of accounting for liabilities
- Criteria for classification of liabilities;
- Determining the detailed journal of liabilities according to the original maturity period, term to maturity at the reporting time, base currency or specific items.
- Confirming whether liabilities that do not exceed recoverable values are recorded or not.
(4) Principles of recognition of inventories
- Principles of recognition of inventories: Clearly stating whether inventories are recorded according to the historical cost or the net realizable value
- Principles of costing of inventories: Clearly stating the applied method (e.g. weighted average; first in first out; specific identification; retail methods).
- Methods of accounting for inventories: Clearly determining whether microfinance institutions apply the perpetual inventory count method or the periodic inventory method.
- Methods of setting up provisions against devaluation of inventories.
Clearly specifying that microfinance institutions set up provisions against devaluation of inventories on a basis of the positive difference between historical costs and net realizable values of inventories. Confirming whether net realizable values of inventories are defined in compliance with regulations set forth in the Accounting Standard “Inventories” or not. As provisions against devaluation of inventories are set up based on the difference between current-year provisions and previous-year provisions that have not yet been used up, determining whether provisions must be supplemented or reversely entered into the accounting report.
(5) Principles of recognition and depreciation of fixed assets or fixed assets hired under finance leases
a. Principles of accounting for tangible or intangible fixed assets:
- Clearly determining whether the book value of fixed assets is calculated according to the historical cost or the after – revaluation cost.
- Principles of accounting for costs arising after the primary cost recognition (e.g. costs of upgrade, renovation, maintenance, care and repair of fixed assets): Determining whether they are charged into the book value or operating expenses;
- Clearly stating methods of depreciation on fixed assets; depreciable amounts calculated according to the historical cost or the historical cost minus estimated recoverable value gained from the liquidation and disposal of fixed assets.
- Confirming whether other regulations on management, use and depreciation of fixed assets are observed or not.
b. Principles of accounting for fixed assets hired under finance leases:
- Clearly specifying the method of determination of the book value;
- Clearly specifying the method of depreciation of fixed assets hired under finance leases.
(6) Principles of accounting for prepaid expenses
- Clearly defining which prepaid expenses are gradually distributed into operating expenses.
- Methods and time of distribution of prepaid expenses;
- Determining whether prepaid expenses are recorded according to the prepayment term?
(7) Principles of accounting for liabilities
- In which way liabilities are classified?
- Determining the recording of liabilities according to specific items, the original maturity periods, term to maturity at the reporting time, or base currency.
- Determining whether liabilities are revaluated to ensure they satisfy definitions of accounts or items of foreign currency origin or not.
- Determining whether liabilities are recognized not to be less than value of repayment obligations or not.
- Determining whether provisions for liabilities are set up or not.
(8) Principles of recognition of accrued expenses: Clearly specifying which expenses not yet been paid but estimated to be recognized as operating expenses within an accounting period. Defining bases for determination of values of these expenses.
(9) Principles and methods of recognition of provisions payable:
- Principles of recognition of provisions payable: Clearly defining whether provisions payable already recognized meet requirements set out in the Accounting Standard “Provisions, contingent assets and debts” or not.
- Methods of recognition of provisions payable: Clearly determining provisions payable that are additionally set up (or charged back) according to the positive (or negative) difference between current-year provisions payable and previous-year unused provisions payable recorded in accounting books.
(10) Principles of recognition of equity:
- Determining whether paid-in capital of owners is recorded according to the actual amount of contributed capital or not.
- Specifying reasons for recognizing the differences upon asset revaluation and exchange differences.
- Determining the method of calculation of undistributed profits. Principles of distribution of profits and dividends.
(11) Principles and methods of recognition of incomes:
- Income from credit and service operations: Determining whether this income fully meets requirements for recognition of revenues set out in the Accounting Standard “Revenues and other income” or not. Determining which method is used for recognizing income.
- Other principles of recognition of income.
(12) Principles of accounting for expenses:
- Determining whether operating expenses (e.g. credit and service operations) and administrative expenses arising within an accounting period are recorded or not.
- Detailing administrative expenses.
(13) Principles and methods of recognition of current CIT expenses: Current CIT expenses must be determined on the basis of taxable income and CIT rates in the present year.
(14) Other accounting principles and methods: Clarifying other accounting methods and principles intended for helping users understand that financial statements have been presented on the basis of compliance with the Vietnamese Accounting Standards promulgated by the Ministry of Finance.
4.5. Supplementary information about items included in financial status reports
- In this section, microfinance institutions must give the detailed presentation and analysis of data included in the financial status report in order to help users of the financial statement to have insight into contents of items and accounts of assets, liabilities and equity.
- The unit of account used for calculation of values in the section “Supplementary information about items included in financial status reports” must be the same as used in the financial status report. Data input in the column “Beginning of the accounting year” must be copied from the column “End of the accounting year” in the explanatory notes on financial statements in the previous accounting period. Data input in the column “End of the accounting year” shall come from:
+ Current-period financial status report;
+ General accounting ledgers;
+ Journals, vouchers or relevant detailed spreadsheets.
- Microfinance institutions may, on their own, decide the ordinal numbers of detailed information represented in this section provided that they are relevant to the numbers given in the financial status report, and are easy to be collated and compared between accounting periods.
- In case where microfinance institutions retrospectively change accounting policies or make retroactive adjustments for material errors in the previous accounting period, they must adjust comparable data (data entered at the column “beginning of the accounting year”) in order to ensure that these adjustments are comparable and explainable. In case, for unknown reasons, data input at the column "Beginning of the accounting year" are not comparable with those at the column "End of the accounting year", this case must be clearly explained in the explanatory notes on the financial statement.
4.6. Supplementary information about items included in income statements.
- In this section, microfinance institutions must give the detailed presentation and analysis of data included in the income statement in order to help users of the financial statement to have more insight into contents of items and accounts of income and expenses.
- The unit of account used for calculation of values in the section “Supplementary information about items included in income statements” must be the same as used in the income statement. Data input in the column “Beginning of the accounting year” must be copied from the explanatory notes on financial statements in the previous accounting period. Data input in the column “Current year” shall come from:
+ Current-period income statement;
+ General accounting ledgers;
+ Journals, vouchers or relevant detailed spreadsheets.
- Microfinance institutions may, of their own accord, decide the ordinal numbers of detailed information represented in this section provided that they are relevant to the numbers given in the income statement, and are easy to be collated and compared between accounting periods.
- In case, for unknown reasons, data input at the column "Previous year" are not comparable with those at the column "Current year", this case must be clearly explained in the explanatory notes on the financial statement.
4.7. Supplementary information about items included in cash flow statements
- In this section, microfinance institutions must give the representation and analysis of data included in the cash flow statement in order to help users to have more insight into elements affecting cash flows within the accounting period.
- The unit of account used for calculation of values in the section “Supplementary information about items included in cash flow statements” must be the same as used in the cash flow statement. Data input at the column “Previous year” must be copied from those in the explanatory notes on the previous-year financial statement; Data input at the column “Current year” shall come from:
+ Current-year cash flow statement
+ General accounting ledgers;
+ Journals, vouchers or relevant detailed spreadsheets.
4.8. Other information
- In this section, microfinance institutions must present important information (if any) other than information provided in the aforesaid sections for the purpose of providing oral or numerical information according to regulations laid down in the particular accounting standard in order to help users understand that financial statements have been represented in a truthful and rational manner.
- Upon presenting explanatory information in this section, depending on requirements and characteristics of information as provided in 4.5 through 4.7 herein, microfinance institutions may issue detailed and elaborate forms in a relevant manner and comparable data where necessary.
- In addition to information to be presented according to provisions in the section 4.5 through the section 4.6, microfinance institutions may present additional information where necessary for users of financial statements.
Chapter IV
ACCOUNTING BOOKS
Article 81. Accounting books
1. Accounting books shall be intended for recording, systematizing and storing all of economic and financial transactions already arising according to economic contents and in chronological order in relation to microfinance institutions. Each microfinance institution shall use only one system of accounting books in an accounting period. Microfinance institutions must implement regulations on accounting books in the Law on Accounting, the Government’s Decree No. 174/2016/ND-CP dated December 30, 2016 elaborating on certain articles of the Law on Accounting, documents providing instructions on implementation of the Law on Accounting and other instruments providing instructions on amendments and supplements to the Law on Accounting.
2. Microfinance institutions may, of their own accord, create sample accounting books, but must ensure that information about economic transactions is transparent, sufficient, easy to be checked, controlled and collated.
3. Depending on business characteristics and managerial requirements, microfinance institutions may, on their own, choose the bookkeeping form provided that information about transactions is reflected in full, promptly, easily to be checked, controlled and collated.
Article 82. Responsibilities of bookkeepers
Accounting records must be strictly managed by persons clearly assigned to keep and record accounts in accounting records. If an accounting book is transferred to a staff member, that staff member shall be responsible for contents in that accounting book and safekeeping of such book during its useful life. If a staff member who keeps and records accounts in accounting records, chief accountant or a person in charge of accounting activities has been substituted, chief accountants must arrange the transfer of responsibilities for keeping and recording accounts in accounting books between the former and the new bookkeeper. The report on transfer of accounting books must carry the signature of the chief accountant.
Article 83. Opening and writing of accounting books and signatures
1. Opening of accounting books
Accounting books must be opened at the beginning of an accounting year. As for newly-established microfinance institutions, accounting books must be opened from the establishment date. Legal representatives and chief accountants of microfinance institutions shall be responsible for signing accounting books for ratification purposes. Accounting books may exist in the form of pages bound together into a book or separate sheets. Pages after being used must be bound into books for archive purposes. Before using accounting books, the following procedures must be implemented:
- As for accounting books in the form of pages bound together into a book, the first page must clearly specify microfinance institution’s name, book title, book opening date, accounting year, term of recording entries in books, full name and signature of bookkeeper, chief accountant and legal representative, book closing date or date of transfer of accounting books to other persons. Accounting books must be paginated from the first page to the last page, and must carry adjoining stamps between two pages.
- As for accounting books in the form of separate sheets, at the beginning of each book, the separate sheet must include microfinance institution’s name, ordinal number of each sheet, book title, useful months and bookkeeper’s full name. Before use, separate sheets must be signed and stamped by the General Director/Director of a microfinance institution, and recorded in the register for use of separate-sheet accounting books. Separate sheets must be arranged in order of bookkeeping accounts to ensure safety and easy traceability.
2. Writing of accounting books must be based on accounting documents proved to conform to regulations on accounting documents. All data input in accounting books must be proved by legitimate and relevant accounting documents.
3. Book closure: At the end of an accounting period, accounting books must be closed before preparation of financial statements. In addition, accounting books must be closed in case of inspection or in other cases in accordance with laws.
4. Bookkeepers of accounting service providers must sign and clearly give the numbers of their practicing certificates, names and addresses of accounting service providers. Bookkeepers as individuals practicing accounting must specify the numbers of their practicing certificates.
Article 84. Correction of accounting books
1. Whenever errors contained in accounting books are discovered, they must be corrected by using the method in compliance with regulations enshrined in the Law on Accounting.
2. In case where errors have been found previous accounting periods, microfinance institutions must make retroactive adjustments in accordance with the accounting standard “Changes in accounting policies, accounting estimation and errors”.
Chapter V
IMPLEMENTATION PROVISIONS
Article 85. Effect and implementation
1. This Circular takes effect on April 1, 2019 and apply in the financial year starting on January 1, 2020.
2. The Director of the Accounting and Audit Management and Supervision Department, microfinance institutions and Heads of involved entities shall be responsible for implementing this Circular.
3. In the course of implementation hereof, if there is any difficulty arising, the Ministry of Finance should be promptly informed to consider deciding possible solutions./.
For the Minister
Deputy Minister
Do Hoang Anh Tuan
Vietnamese
Circular 05/2019/TT-BTC DOC (Word)
Circular 05/2019/TT-BTC PDF (Original)
