Circular No. 107/2017/TT-BTC dated October 10, 2017 of the Ministry of Finance on guiding the public sector accounting

THE MINISTRY OF FINANCE

Circular No. 107/2017/TT-BTC dated October 10, 2017 of the Ministry of Finance on guiding the public sector accounting

Pursuant to the Law on Accounting No. 88/2015/QH13 on November 20, 2015;

Pursuant to the Government s Decree No. 174/2016/ND-CP dated December 30, 2016 on guidelines for the Law on Accounting;

Pursuant to Government s Decree No. 87/2017/ND-CP dated July 26, 2017 on functions, tasks, powers and organizational structure of the Ministry of Finance;

At the request of Director of the Department of Audit and Accounting Regulation,

The Minister of Finance promulgates a Circular on guidelines for public sector accounting.

Chapter I

GENERAL PROVISIONS

Article 1. Scope of adjustment

This Circular provides guidelines for the list of forms and methods of making compulsory accounting vouchers; the list of accounting system and methods of recording accounts; the list of forms and methods of making accounting books; the list of forms and methods of making and presenting financial statements, budget final accounts of entities prescribed in Article 2 of this Circular.

Article 2. Subject of application

1. This Circular applies to: Regulatory bodies; public sector entities, except for public sector entities that cover recurrent expenditures and capital expenditure by their own budgets and apply business financial regulations or business accounting regulations when satisfying conditions in accordance with applicable regulations and laws; and other entities, regardless of using or not using state budget (hereinafter referred to as public sector entities).

2. If a public sector entity covering recurrent expenditures and capital expenditure by its own budget and applying business accounting regulations carry out an order of commissioning of state or receive foreign aid or a fund of which a given amount may be deducted or withheld, final accounts shall be made as prescribed in Appendix 04 of this Circular.

Chapter II

SPECIFIC PROVISIONS

Article 3. Accounting vouchers

1. Public sector entities must use same forms of compulsory accounting vouchers prescribed in this Circular. During the implementation, public sector entities may not modify forms of compulsory accounting vouchers.

2. Apart from compulsory accounting vouchers prescribed in this Circular and other documents, public sector entities are entitled to design their own accounting vouchers that reflect their accrual economic events. Self-designed vouchers must contain at least 7 items prescribed in Article 16 of the Law on Accounting, in conformity with the recording and the entity’s needs.

3. Printed vouchers must be kept with care, and prevented from destruction or rotting. Cheques, receipts, and valuable papers must be managed similarly to money.

4. The list, forms and methods of making compulsory accounting vouchers are prescribed in Appendix No. 01 issued herewith.

Article 4. Accounts

1. Accounts give a regular, continuous, and systematize reflection of assets, receipt and use of funds financed by state budget and other fund sources; revenues and expenditures on activities, performance, and other sources at public sector entities.

2. Classification of accounts:

a) Accounts on balance sheet including type 1 to type 9 and to be double recorded (double-entry bookkeeping).

b) Accounts off balance sheet including type 0 and to be single recorded (non double-entry bookkeeping). Accounts off balance sheet relating to state budget or derived from state budget (account 004, 006, 008, 009, 012, 013, 014, 018) must be included in state budget entries by years (previous year, this year, following year (if any)) and at other needs of state budget.

c) If an economic event occurs relating to receipt and use of fund financed by state budget; foreign aid or loans; fund of which a given amount is deducted or withheld, the accountant shall do accounting for both on and off balance sheet accounts according to state budget entries and appropriate years.

3. Selection of account system:

a) Public sector entities shall, according to the account system issued herewith, select certain accounts for them.

b) The entity may add more accounts in any of the following cases:

- Add extra detailed accounts prescribed in the list of account system in Appendix 02 hereof shall be added to serve the entity’s needs.

- Extra accounts of same level with those prescribed in the list of account system in Appendix 02 hereof shall be added with the Ministry of Finance’s consent in writing.

4. The list of account system, documents explaining contents, structure and methods of recording of accounts are specified in Appendix 02 hereof.

Article 5. Accounting books

1. The public sector entity must set up accounting books to record, systematize, and keep all accrual economic events in connection with accounting unit. The accounting book shall be kept in accordance with laws and regulations on accounting, relevant documents and this Circular.

2. Any public sector entity receiving and using fund financed by state budget; foreign aid or loans; fund of which a given amount is deducted or withheld must set up accounting books for separate monitoring according to state budget entries and other requirements with the purpose of making budget final accounts and competent authorities.

3. Types of accounting books

a) Each accounting unit only uses an accounting book system for a fiscal year, including general accounting books and detailed accounting books.

Depending on types of accounting, the unit shall set up general ledgers or detailed ledgers and use them in accordance with regulations on contents, procedures, and method of recording.

Accounting books of state budget and fund of which a given amount is deducted or withheld according to state budget entries are used to monitor them.

Accounting books that are used for monitoring the receipt and use of foreign aid and loans according to state budget entries serve as basis for preparation of final accounts as prescribed in this Circular and at the request of donors.

b) Form of general accounting book:

- Journal to be used for recording accrual economic events presented in chronological order. In necessary case, it is possible to combine the recording in chronological order and classification of accrual economic events. Figures in journal must reflect total accrual economic events in an accounting period.

- General ledger is used for recording economic events accruing by economic events (accounts). In the general ledger, it is possible to combine the recording in chronological order and accrual economic events. Figures in the general ledger reflect assets, budget and use of budget.

c) Template of detailed accounting books and cards:

Detailed accounting books and cards are used to record accrual economic events relating to accounting subjects at the management requirements that general ledger has not reflected them specifically. Figures in the detailed ledger give specific information to serve internal management and create items in financial statements and budget final accounts.

According to requirements for management and accounting of each specific accounting subject, the entity is entitled to add extra items (columns and rows) in the detailed accounting books and cards to make financial statement and final accounts

4. Responsibilities of persons keeping and recording accounting books

a) Accounting books must be managed closely and assigned to an accountant with specific responsibilities for keeping and recording them. The assigned accountant must take responsibility whilst he/she keeps and record the accounting book.

b) When the accountant who is keeping and recording the accounting book is replaced, the chief accountant or accountant in charge must assign responsibilities to new accountant. The former accountant must take responsibility for the period over which he/she kept and recorded the accounting book, and the latter accountant must take responsibility from the date of handover. The handover note must be certified by chief accountant or accountant in charge.

c) The accounting book must be recorded promptly, clearly, and sufficiently according to items therein. Information and figures recorded in the accounting book must be accurate, truthful, and conformable with respective accounting vouchers.

d) The accounting book must be recorded in chronological order of accrual economic events. The information and figures in the accounting book of the subsequent year must succeed those in the preceding year to ensure the continuity from the setting up to closing of book.

5. Setting up accounting books

a) Rules for setting up accounting books

An accounting book must be set up at the opening of accounting period or as soon as practicable after receiving establishment decision of accounting unit. The accounting book must be set up at the beginning of fiscal year to transfer balance from the accounting book of the preceding year and record accrual economic events of the new fiscal year from January 1.

Figures in accounting books of receipt and use of state budget after December 31 shall be carried over from this year to preceding year for continuous monitoring of figures arising out during the adjustment period to serve the making of final accounts as prescribed.

The entity may set up detailed ledgers as its needs.

b) Manual setting up of accounting books:

The accounting unit must complete the legal procedures for accounting book as follows:

- For accounting book in bound book form:

+ Cover’s left corner must bear accounting unit’s name, cover’s middle must bear book’s name, dates of setting up and closing book, full name and signature of the person setting up the book, signatures and seals of chief accountant or accountant in charge and unit head; dates of closing or transferring book.

+ Pages of accounting book must be numbered from 1 to the last page, any two pages must bear fan stamping of the accounting unit.

+ The accounting book is not considered legitimate until all above conditions are met.

- For accounting book in separate sheet form:

+ Cover’s page must bear unit’s name, page number, book’s name, month of use, full name of accountant who is keeping and recording the accounting book.

+ Separate-sheet book must bear signature and seal of the unit head and be registered before being used.

+ Separate-sheet book must be arranged in the account order and kept in a safe and easily seen place.

c) Electronic accounting books:

The electronic accounting book must contain elements of an accounting book in accordance with laws and regulations on accounting. If the accounting book is kept in the electronic device, a printed and bound general ledger is still required and all procedures prescribed in Point b, Clause 5 of this Article must be completed.

If remaining accounting books are be printed but kept in electronic devices, the head of accounting unit must ensure that data must be safe, secured and accessible during the keeping period.

6. Recording accounting books

a) An accounting book is recorded according to respective accounting vouchers, all figures present in the accounting book must be justified by corresponding accounting vouchers; numbers and letter must be written clearly, continuously, and systematically; no abbreviations, interlineations, or spacing out lines are allowed.

b) If the book is recorded manually, indelible ink must be used, no red ink is allowed. Procedures for recording and forms of accounting books must be done in accordance with Appendix 03. When all pages are fully written, figures of each page must be sum up and the total must be carried over to the top of the succeeding page, no interlineations on the top or bottom of current page is allowed. If a page is not fully written, blank section must be crossed out; no erasures or no chemicals intended for correction are allowed.

7. Closing accounting books

Closing accounting book means calculation to determine total accrual debits, total accrual credits, and closing balance of each account, or total revenue, expenditure, fund balance, receipt, discharge, and inventory.

a) Time for closing

- A cash fund book must be closed at the end of each day. After closing the book, it must make reconciliation between the cash book of the accountant, the cashier s cashbook and the cash in the safe to ensure they are accurate and matched. On the last day of the month, a cash inventory statement must be drawn up. After the inventory, the cash inventory statement shall be kept together with the cash accounting book on the last day of the month.

- A bank/treasury deposit book must be closed at the end of the month for reconciliation purpose; the reconciliation table (certified by the bank/treasury) shall be kept together with monthly bank/treasury deposit book.

- The accounting unit must close the accounting book at the end of the fiscal year before financial statement is made.

- In addition, the accounting unit must close the accounting book in case of stocktaking/making an inventory on an ad-hoc basis or in other cases as per the law.

b) Procedures for closing accounting books

(1) For manual bookkeeping:

Step 1: Make a check and reconciliation before closing accounting book

- At the end of accounting period, after accrual accounting vouchers during the period are all recorded to the accounting book, a reconciliation between figures in accounting vouchers (if necessary) and those in the book, or between books is required to ensure matching figures.  Total amounts accruing in the general ledger and detailed ledgers.

- Make a grand table of accounts recorded in multiple books or multiple pages from detailed accounting books and cards.

- Total accrual debits and accrual credits of accounts in the general ledger or journal-general ledger to ensure that the figures are matched and equal to accrual amount Then reconcile figures in general ledger and those in detailed ledger or grand table, between figures of accountant and those of cashier or storekeeper. The accounting book shall be closed when the matching figures are assured. If there is any difference, the reason shall be determined and the difference shall be reconciled until they are matched.

Step 2: Closing book

- When closing book, draw a line under the last transaction line of the accounting period. Then write “total accrual amount in the month” below the said line;

- Keep writing “closing balance” (month, quarter, and year);

- Keep writing “total accrual amount from the previous months” from the beginning of the quarter;

- Keep writing “total accrual amount from the beginning of the year";

“Closing balance”is calculated as follows:

After calculating the balance of each account, the account shall be written in the Debit column or Credit column, whichever is greater.

- Finally, draw two straight lines to end the closing.

- If a detailed accounting book contains accrual debit column, accrual credit column, and a “balance” column (or receipt, discharge, “balance” or revenue, expense, “balance”, etc.), the figures in the balance column shall be written in the line “Closing balance” off the “Balance” column. After closing the accounting book, the bookkeeper must sign under the 2 lines, and then the chief accountant or person in charge will countersign after checking for accuracy and balance. And then refer it to the unit head for inspection and approval for legal status of figures

(2) For computerized bookkeeping:

Process of closing accounting book in accounting software must be built in such a manner that it satisfies rules for closing book applied to manual bookkeeping.

8. Modification of accounting book

a) Method of modifying accounting book: In accordance with Clause 1 or Clause 4 Article 27 of the Law on Accounting.

b) Modifying accounting book in a fiscal year

Regarding entries that are recorded in fiscal year N, in case of misstatements or upon requests of a competent authority, the figures shall be modified as follows:

(1) From January 1 of year N to December 31 of year N:

From January 1 of year N to December 31 of year N, the accountant shall modify the accounting book of current year using the method prescribed in sub-point a Clause 8 of this Article.

Regarding entries in conjunction with budget final accounts, corresponding items in detailed ledger will also be modified in accordance with modified entries.

(2) From January 1 of year N+1 to the submission of financial statement to competent authority:

From January 1 of year N+1 to the submission of financial statement to competent authority, the accountant shall modify the accounting book of reporting year using the method prescribed in sub-point a Clause 8 of this Article.

Regarding entries in conjunction with budget final accounts, corresponding items in detailed ledger will also be modified in accordance with modified entries.

(3) After submission of financial statement to competent authority:

- After submitting financial statement, the accountant will modify the financial accounting book using the method prescribed in sub-point a Clause 8 of this Article, and give notes to the financial statement.

- Regarding entries in conjunction with budget final accounts:

+ If the budget final accounts have not been approved, corresponding items in the detailed ledger will be also modified.

+ If the budget final accounts have been approved, corresponding items in the detailed ledger and notes to the budget final accounts will also be modified.

9. The list of accounting books, forms, and methods of making accounting books are specified in Appendix 03 issued herewith.

Article 6. Budgetary statements

1. Entities required to make statements

Public sector entities financed by state budget must make budget final accounts of funds provided by state budget.

If public sector entities accrue other amounts receivable or payable from other sources subject to statement similarly to state budget, they must make statements of these accounts.

2. Purposes

Budget final accounts are intended for aggregating receipt and use of state budget of public sector entities and presented according to state budget entries to provide it to superior agency, finance authority and other competent authorities. The information provided in budget final accounts serves as basis for evaluating unit’s observance to laws and regulations on state budget and other financial regime and for regulatory bodies, superior bodies and unit leaders to inspect, assess, supervise, and administer the financial activities of the unit.

A final accounts of other sources that reflect revenues and expenses of other sources (except for state budget) of public sector entity must be referred to superior body, finance authority and other competent authority. The information provided in final accounts of other sources serves as basis for evaluating unit’s implementation of financial regime and for superior bodies, finance agencies, other competent authorities and unit leaders to assess whether regime and policies applied to the unit is effective.

3. Rules and requirements for making and displaying final accounts

a) Rules:

- The final accounts shall be made according to figures after accounting book’s closure.

- For budget final accounts:

+ The budget final accounts includes amounts that the unit has received and used from state budget in the year, including figures accruing during the statement adjustment period in compliance with the laws and regulations on state budget.

+ The statement figures must be reconciled and verified by state treasury in administrative division where transactions are conducted.

+ Expenditure final accounts paid from state budget is an amount that has been already paid with adequate documentary evidence, expenditures from sources to be recorded in state budget are only accounted for when the competent authority has certified that revenues and expenses have been recorded in state budget.

- For final accounts of other sources: Figures include revenues and expenditures from other sources other than state budget that the entity has realized from the beginning of the year to December 31 inclusive.

b) Requirements:

The final accounts must be made in such a manner that stays honest, impartial, adequate, timely, and reflects practical revenues and expenditures of each budget of the public sector entity.

The final accounts must be made in conformity with contents and methods as prescribed and in consistent form between reporting periods. The system of criteria to be showed in the budget final accounts must be created in conformity and consistency with annual estimate criteria assigned by the competent authority and state budget entries and facilitate the comparison between realized and estimated amounts and between accounting periods.

If the budget final accounts are made in such a manner different from criteria in the estimate and statements of accounting period in previous years, it must be given in the notes to the annual financial statement.

4. Reporting period:

Budget final accounts, other statements shall be made on the annual basis.

The final annual accounts of state budget shall be made according to figures of revenues and expenditures of budgetary year of the public sector entity, until the closing of budget final accounts adjustment (January 31 of subsequent year) in accordance with laws and regulations on state budget.

The final accounts shall be made according to revenues and expenses from other sources of the public sector entity, until the closing day of fiscal year (December 31) inclusive.

If another statement is required, by law, according to other accounting periods, the public sector entity must make such kind of statement.

5. Responsibilities of entities in making and submitting statements

a) Responsibilities:

The public sector entity must make and submit budget final accounts prescribed in this Circular and reports serving the budget final accounts and other requirements for state budget management as per the law on state budget.

If the public sector entity accrues revenues and expenditures from sources other than state budget which requires final accounts with superior authority, finance agency and competent authority, it must make and submit final accounts of other sources as prescribed in this Circular.

Each public sector superior entity must prepare an annual consolidated report on final accounts of affiliated entities in accordance with applicable regulations and laws.

b) Responsibilities of finance authorities, state treasury agencies:

finance authorities, state treasury agencies, and relevant units must cooperate in inspecting, reconcile, adjust, provide and use figures of budget and budget use, management and use of property and other activities in connection with the state budget revenues and expenditures and professional operations of the public sector entity.

6. Contents of and deadline for annual final accounts

a) Contents:

Each public sector entity must submit the following to superior budget estimate unit or finance authority at the same administrative level (if the superior budget estimate unit is absent):

- Annual final accounts prescribed in this Circular.

- Forms of reconciliation of budget estimates shall be issued similarly to disbursement of estimated fund at state treasury agencies, budgetary advances and payment of budgetary advances at state treasury agencies, table of deposit account balance at state treasury agencies prescribed in Circular No. 61/2014/TT-BTC dated May 12, 2014 of the Ministry of Finance and relevant amending and replacing documents (if any).

- Other reports serving the making of budget final accounts as prescribed by competent authority.

b) The deadline for submitting annual final accounts by public sector entities financed by state budget is specified in the Law on State budget and its guiding documents.

7. The list of reports, forms, description of making budget final accounts is prescribed in Appendix 04 issued herewith.

Article 7. Financial statement

1. Entities required to make financial statements

After the closure of fiscal year, public sector entities must close book and submit a financial statement to competent authority and relevant units as prescribed.

2. Purposes

The financial statement is intended for provide information about financial situation, historical financial performance and cash flow of the entity with the purpose of considering issuing decisions on financial and budgetary activities. The financial statement will enhance the entity’s accountability in terms of receipt and use of resources as per the law.

The said financial statement serves as the basis for the preparation of the superior entity’s consolidated financial statement.

3. Rules and requirements for making financial statement

a) Rules:

The financial statement shall be made according to figures after accounting book’s closure. The financial statement must be made in compliance with rules, contents, and methods as prescribed and present in consistency in accounting periods, any difference in presentation between accounting periods must enclose with notes for reasons.

The financial statement must bear the signatures of the person prepared, chief accountant, and head of accounting unit. The signatories of financial statement must take responsibility for its contents.

b) Requirements:

The financial statement must reflect truthfully and impartially contents and value of items; present in a close and systematic structure in respect of financial situation, performance and cash flows in operating activities.

The financial statement must be made in a timely manner and on schedule applied to type of entities, and stay clear, easily understandable, and accurate.

The statement must reflect continuous figures, data of this period must be preceded by data of the previous period.

4. Reporting period

The entity must make a financial statement at the end of the fiscal year as prescribed in the Law on Accounting.

5. Responsibilities of entities in making financial statements

a) Public sector entities must make annual financial statements using forms issued herewith; if a public sector entity has particular operation, its statement may be presented according to accounting regulations promulgated or approved by the Ministry of Finance.

b) Public sector entities shall make financial statements using the adequate forms; except for the following accounting units which may choose simple financial statements:

(1) A regulatory agency that meets the following conditions:

- Committee division or equivalent affiliated to the People’s Committee of district which is only assigned budget expenditure estimate of recurrent expenditures;

- It is not assigned budget expenditure estimate of capital expenditures, expenditures from foreign capital; not assigned revenue estimate, costs or charges;

- It has no affiliated entity.

(2) A public sector entity that meets the following conditions:

- The public sector entity that is classified as an entity of which recurrent expenditures are covered by state budget (according to functions and objectives assigned by the competent authority, has no or low revenue sources);

- It is not assigned budget expenditure estimate of capital expenditures, expenditures from foreign capital; not assigned revenue estimate, costs or charges;

- It has no affiliated entity.

c) If a superior accounting unit has inferior units other than accounting units, it must make a combined financial statement, including its and its inferior unit’s financial statements, excluding figures arising out of internal transactions between superior and inferior units and between inferior units (these inferior units, in the internal transactions, are considered as dependent cost-accounting units and are only required to submit financial statements to the superior unit for consolidation (aggregation), without other agencies.

6. Contents of financial statement and deadline for submitting financial statement

a) Contents:

Each public sector entity must submit annual financial statements to the superior entity or competent authorities as prescribed in this Circular.

b) Deadline for submitting financial statement:

The public sector entity must submit an annual financial statement to the competent authority or superior entity within 90 days, from the closure of fiscal year as per the law.

7. Publishing financial statement

The financial statement shall be published as prescribed in laws and regulations on accounting and relevant documents.

8. The list of reports, forms, description of making simple and detailed financial statements is prescribed in Appendix 04 issued herewith.

Chapter III

IMPLEMENTATION ORGANIZATION

Article 8. Effect

1. This Circular takes after 45 days, from the signing date and applies from January 1, 2018.

2. This Circular supersedes Decision No. 19/2006/QD-BTC dated March 30, 2006 of the Ministry of Finance on promulgation of public sector accounting and Circular No. 185/2010/TT-BTC dated November 15, 2010 of the Ministry of Finance on guidelines for public sector accounting issued together with Decision No. 19/2006/QD-BTC.

Article 9. Implementation organization

1. Ministries, People’s Committees of provinces and central-affiliated cities shall direct the implementation of this Circular to public sector entities within their scope of management.

2. Director of the Department of Audit and Accounting Regulation, Director of Public Sector Department, Director of State budget Department, the Chief of the Ministry Office and heads of relevant units affiliated to the Ministry of Finance shall instruct, inspect and implement this Circular./.

For the Minister

The Deputy Minister

Do Hoang Anh Tuan

* All Appendices are not translated herein.