Circular 109/2018/TT-BTC on accounting regimes of accumulated funds

THE MINISTRY OF FINANCE 

CircularNo. 109/2018/TT-BTC dated November 15, 2018 of the Ministry of Finance on providing guidance on accounting regimes of accumulated funds for repayment of debts

Pursuant to the Law on Management of Public Debts dated November 23, 2017;

Pursuant to the Law on Accounting dated November 20, 2015;

Pursuant to the Law on State Budget dated June 25, 2015;

Pursuant to the Government’s Decree No. 94/2018/ND-CP dated June 30, 2018 on public debt management operations;

Pursuant to the Government’s Decree No. 97/2018/ND-CP dated June 30, 2018 on on-lending of the Government’s ODA loans and foreign concessional loans;

Pursuant to the Government’s Decree No. 92/2018/ND-CP dated June 26, 2018 on the task of management and utilization of accumulated funds for repayment of debts;

Pursuant to the Government’s Decree No.174/2016/ND-CP dated December 30, 2016 on detailing a number of articles of the Law on Accounting;

Pursuant to the Government s Decree No. 163/2016/ND-CP dated December 21, 2016 elaborating certain articles of the Law on State Budget;

Pursuant to the Government s Decree No. 87/2017/ND-CP dated July 26, 2017, on 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 guidance on the accounting regime of the accumulated fund for repayment of debts.

Chapter I

GENERAL PROVISIONS

Article 1. Scope of adjustment

This Circular provides for accounting documents, accounts, accounting records, financial statements and other tasks related to the organization of accounting activities to record economic and financial transactions associated with operations of the accumulated fund for repayment of debts (hereinafter referred to as Fund) in accordance with laws.

Article 2. Subjects of application

This Circular shall apply to the Department of Debt Management and External Finance - the Ministry of Finance and other related entities and persons.

Article 3. Tasks of accounting for the Fund

Accounting for the Fund shall include the following tasks:

1. Collecting, processing, checking, monitoring and analyzing assessment information on the recovery of domestic debts from foreign borrowed funds on-lent by the Government; the collection of provisions for risks to on-lent funds; the collection of on-lending management fees; the collection of the Government’s guarantee fees and interest on late payment of guarantee fees (if any) in order to ensure repayment of foreign loans on-lent by the Government; the collection of advance capital from the accumulated funds for repayment of debts; payments from debt restructuring activities and debt portfolios; interest on deposits, loans, entrustment of management of capital and investment of the Fund and other collections in accordance with regulations in force.

2. Collecting, processing, checking, monitoring and analyzing assessment information on the repayment of foreign debts (including principal, interest and fees (if any)) for on-lent borrowed funds; the advance payment of capital for repayment of on-lent foreign loans and the Government’s guarantee under the Prime Minister s decision; state budget expenditures for performing public debt management tasks; funds lent to the state budget, idle capital investments and payments for purchase of municipal bonds under the Law on Public Debt Management and the Decree No. 92/2018/ND-CP and other spending amounts in accordance with regulations in force.

3. Monitoring provisions for risks, handling potential risks if the Government offers guarantees for foreign loans of enterprises and credit institutions, and other expenditures on the management of the Fund.

Article 4. Methods of accounting for the Fund

The accounting for the Fund shall be carried out according to methods and principles defined in the Law on Accounting, the Government’s Decree No. 174/2016/ND-CP dated December 30, 2016 on detailing a number of articles of the Law on Accounting (hereinafter referred to as Decree No. 174/2016/ND-CP) and other instructions given herein.

Article 5. Units of account used in the Fund s accounting

1. Currency unit shall be Vietnamese dong (national symbol is "d" and international symbol is "VND"). In the presence of foreign currency, an accounting record in which the base currency is entered in the Account 007 "Foreign currencies" and that foreign currency is converted into Vietnamese dong at the prescribed exchange rate must be opened.

2. When preparing general financial statements or general management reports, in the presence of data expressed in more than 9 numerals, the shortened monetary unit that may be selected shall be thousand dongs. In case of any data expressed in more than 12 numerals, the shortened monetary unit that may be selected shall be million dongs. In case of any data expressed in more than 15 numerals, the shortened monetary unit that may be selected shall be billion dongs.

The shortened monetary unit to be used shall be rounded according to the following rules: If the digit standing behind the unit digit indicating the shortened monetary unit is at least five (5), one (1) will be added to that unit digit; if the digit standing behind the unit digit indicating the shortened monetary unit is less than five (5), it will be omitted.

Article 6. Period of accounting for the Fund

The accounting period, including accounting year or accounting quarter, shall be regulated as follows:

1. Accounting year is 12 months from January 01 to end of December 31 in a calendar year;

2. Accounting quarter is three months from the start of the 1^stday of the initial month of a quarter to the last day of the last month of that quarter.

Article 7. Self-inspection of finance and accounting

1. The Fund shall be subject to the inspection of accounting activities, accounting machinery and accountants in accordance with the decision issued by the Minister of Finance.

2. On an annual basis, the Department of Debt Management and External Finance shall carry out the self-inspection of finance and accounting for the Fund under the existing provisions of legislation on self-inspection of finance and accounting.

Article 8. Responsibilities for management of transaction accounts and operations of the Fund

The Fund shall open a foreign currency and Vietnamese dong transaction account at s State Treasury or Commercial Bank under the provisions of clause 4 of Article 2 in the Government’s Decree No. 92/2018/ND-CP dated June 26, 2018 on management and utilization of the Fund.

Article 9. Responsibilities for management, use and provision of accounting information and materials

1. The Department of Debt Management and External Finance shall elaborate the regulations on the management, use and safekeeping of accounting documents, clearly stating the responsibilities and powers of each division and each accountant; ensure the adequate number of facilities and means for management, storage and safekeeping of accounting documents;

2. The Department of Debt Management and External Finance shall be responsible for providing accounting information and documents in a timely, full and authentic manner to competent authorities in order for them to perform tasks prescribed by law. Agencies provided with accounting documents shall be responsible for storing and keeping safe custody of accounting documents during their shelf life, and shall have to return fully and in time the accounting documents they have used;

3. Providing accounting information and documents for users shall be subject to the decision issued by the Director of the Department of Debt Management and External Finance as per law. Use and exploitation of accounting documents shall be subject to the written consent given by the Director of the Department of Debt Management and External Finance or the authorized person.

Article 10. Organization of accounting machinery

The Department of Debt Management and External Finance shall set up the accounting machinery in order to carry out the accounting regime applied to the Fund, designate a person to hold accounts, Chief Accountant (or a person in charge of accounting activities) in accordance with the Decree No. 92/2018/ND-CP dated June 26, 2018 and the Decree No. 174/2016/ND-CP dated December 30, 2016.

Chapter II

ACCOUNTING DOCUMENTS

Article 11. General provisions on accounting documents

1. Accounting documents shall be subject to the Law on Accounting and the Decree No. 174/2016/ND-CP.

2. Specific contents shall be regulated in Article 12, 13 and 14 herein.

Article 12. Preparation of accounting documents

1. All economic and financial transactions related to the Fund’s operations must be recorded in accounting documents. Each accounting document shall be prepared once to reflect an economic or financial transaction that may arise;

2. Contents of each accounting document must be transparent and consistent with contents of economic or financial transactions that may arise;

3. Texts inscribed on accounting documents must be clear and any erasure or abbreviation shall be prohibited;

4. The amount written in words must be identical to the amount written in numbers;

5. Each accounting document must have the required number of copies. As for accounting documents that need multiple copies, the same contents must be inscribed on these copies at once by using computers, typewriters or carbon paper. In certain special cases where multiple copies must be made but it is unlikely to write information on all copies at once, it shall be permissible to do so twice but information inscribed on all copies must be the same;

6. Accounting documents prepared by computers must include prescribed information and ensure their legality. Accounting documents used as direct bases for entering accounts into accounting records must have credit and debit entries.

Article 13. Signing of accounting documents

1. In order to be valid, all accounting documents must be signed by persons holding titles specified thereon. As for electronic accounting documents, electronic signature prescribed by laws must be appended. All signatures borne on accounting documents must be written by using ballpoint pens or ink pens. Using red ink, pencils or signature stamps for writing signatures on accounting documents shall not be allowed. Signatures on payment documents must be written separately on each copy. A signature on an accounting document given by a person must be the same at all times and identical to the legally registered signature. In the absence of the registered signature, the signature must be identical to the previous one.

2. The signature of the Director of the Department of Debt Management and External Finance (or his/her authorized person), the Chief Accountant (or his/her authorized person) and the stamp affixed to accounting documents must be similar to the valid sample stamp and signature already registered with a State Treasury or commercial bank. The signature of an accountant on an accounting document must be similar to the one defined in the register of sample signatures. The Chief Accountant (or his/her authorized person) shall not be allowed to sign “on behalf of” the Director of the Department of Debt Management and External Finance. The authorized person shall not be entitled to grant authorization to any other person.

3. The Department of Debt Management and External Finance must make a register of sample signatures of the cashier, accountants and Chief Accountant (and his/her authorized person), Director of the Department of Debt Management and External Finance (and his/her authorized person). The register of sample signatures shall need to be paginated and given the adjoining stamp, and put under the control of the Director of the Department of Debt Management and External Finance in order to facilitate inspection when necessary. Each person must write three sample signatures in the register.

4. In case of electronic accounting documents prepared by computers, the computer system shall automatically grant ordinal numbers to accounting documents. An accountant shall be responsible for printing such accounting documents out and submitting them to the accounting unit’s head or his/her authorized person to seek his/her signature under the delegated authority.

5. Signing on accounting documents shall be prohibited if all required information has not been written or fully written by the signatory within his/her scope of duties. The Director of the Department of Debt Management and External Finance shall regulate the delegation of authority to sign on accounting documents in compliance with laws and requirements concerning management and maintenance of strict and safe control of assets.

Article 14. Order of circulation and inspection of accounting documents

1. Accounting documents prepared by the Fund or externally incoming documents must be all sent to the accounting department of the Fund. The accounting department shall have the burden of checking all of these received accounting documents, and may use these documents only after examining and verifying their legitimacy. Accounting documents shall be circulated according to the following steps:

- Prepare, receive and process accounting documents;

- Accountant and Chief Accountant checks and signs on accounting documents, or seeks the approval from the Director of the Department of Debt Management and External Finance in accordance with regulations laid down in each sample accounting document (if any);

- Sort and handle accounting documents, make credit and debit entries and enter accounts into accounting records;

- Retain and keep safe custody of accounting documents.

2. Tasks of inspection of accounting documents:

- Inspection of transparency, authenticity and adequacy of indicators and elements defined on accounting documents;

- Inspection of the legitimacy of economic and financial transactions specified on accounting documents; collation of information inscribed on accounting documents with those on other relevant documents;

- Inspection of the accuracy of data and information inscribed on accounting documents.

3. If any violation against policies, regimes and regulations regarding economic and financial administration of the State has been discovered after an inspection of accounting documents, implementation of these accounting documents must be rejected and such violation shall be promptly informed in writing to the Director of the Department of Debt Management and External Finance to seek his/her timely actions in accordance with regulations currently in force.

4. As for accounting documents which have been prepared in violation of procedures, and whose contents and numerals are not clear, the person responsible for checking or entering data in accounting records shall be required to return faulty accounting documents, request any necessary supplement and make possible modifications in order to make them qualify as evidence for making entries in accounting records.

5. List, samples and interpretation of contents and methods of preparation of accounting documents shall be regulated in Appendix 01 "Nomenclature of accounting documents" hereto.

Chapter III

ACCOUNTS

Article 15. Accounts and chart of accounts

1. The chart of accounts for the Fund’s accounting shall include Balance Sheet accounts and off-Balance Sheet accounts that reflect the Fund’s revenues and expenditures on a regular, continuous, classified and systematic manner. Accounts shall be specific to accounting subjects having separate economic contents.

2. Balance sheet accounts delineate all of the economic or financial transactions specific to accounting subjects including assets, capital sources forming assets and movement of assets at the Fund. Rules of entering Balance Sheet accounts into accounting records shall be uniform to the "double entry bookkeeping" method whereby every entry to an account on the Debit side must have corresponding opposite entries to one or multiple accounts on the Credit side or vice versa.

3. Off-Balance Sheet accounts describe economic indicators already shown in Balance Sheet accounts, but need to be monitored to serve management requirements. Rules of entering off-Balance Sheet accounts into accounting records shall be uniform to the "single entry bookkeeping" method whereby entry to one side of an account does not need to have any corresponding opposite entry to any side of other accounts.

Article 16. Classification and application of the chart of accounts

1. The Chart of Accounts used in the Fund shall be decided by the Ministry of Finance, including 16 Balance Sheet accounts and 01 off-Balance Sheet account.

- Balance Sheet accounts shall be comprised of the followings: Each tier-1 account shall be represented by the three-digit fractional number; Each tier-2 account shall be represented by the four-digit fractional number (3 initial digits signify tier-1 account and the 4^thdigit signifies the tier-2 account);

- Off-Balance Sheet accounts shall be represented by 3 digits with 0 as the initial digit.

2. The Department of Debt Management and External Finance shall consult the Chart of Accounts attached hereto in order to make accounting reports and shall be entitled to add more accounts in the following cases:

- Specific subaccounts may be added to accounts which have been specified in the chart of accounts (Appendix No. 02) hereto in order to meet the management requirements of each accounting entity.

- In case of inserting same-level accounts in accounts specified in the chart of accounts (Appendix No. 02) hereto attached, the written consent must be obtained from the Ministry of Finance prior to such insertion.

3. Chart of accounts, interpretation of accounting contents, accounting structure and methods shall be regulated in Appendix 02 “Chart of accounts” hereto attached.

Chapter IV

ACCOUNTING RECORDS

Article 17. Accounting records

1. The Fund shall open the general accounting record and the detailed accounting record to record all revenues and expenditures arising from operations and management of the Fund. It shall be prohibitory to exclude any revenue or expense from the Fund’s accounting records.

2. Opening, closing and revising accounting records shall be subject to the provisions of the Law on Accounting and the Government’s Decree No. 174/2016/ND-CP dated December 30, 2016 elaborating on certain articles of the Law on Accounting.

3. Recording accounts in accounting records must be timely, transparent and sufficient according to information required in accounting records. Information and data entered in accounting records must be accurate, authentic and consistent with those specified in accounting documents.

4. Recording accounts in accounting records shall be carried out in chronological order of economic and financial transactions. Information and data included in the following year’s accounting records must succeed those specified on the previous year’s accounting records. Accounting records must be continually updated from the time of opening to the time of closure.

5. Accounting records must be strictly managed by persons clearly assigned to keep and record accounts in accounting records. If an accounting record is transferred to a staff member, that staff member shall be responsible for items recorded in that accounting record during the period of safekeeping of and recording of accounts in that accounting record.

6. If a staff member who keeps and records accounts in accounting records, chief accountant or a person in charge of accounting activities has been replaced, responsibilities for keeping and recording accounts in accounting records must be transferred between the old accountant and the new one. The old accountant shall be responsible for items recorded in accounting records during the period of keeping of and recording of accounts in these accounting records. The new accountant shall assume his/her liability from the date of receipt of transferred accounting records. The report on the transfer of accounting records must carry the signature of the chief accountant or the person in charge of accounting activities.

Article 18. Accounting forms

1. The Fund shall apply the form of accounting for journal vouchers.

a) Principles of recording accounts in the form of accounting for journal vouchers shall be regulated as follows:

- Recording accounts in chronological order of economic or financial transactions in the register of journal vouchers;

- Recording accounts according to contents of economic or financial transactions arising in the ledger.

b) Types of accounting records:

- Journal vouchers;

- Register of journal vouchers;

- Ledger;

- Accounting journals.

2. List of accounting records, sample accounting records and interpretation of methods of recording accounts in accounting records shall be regulated in the Appendix No. 03 “Nomenclature of accounting records” hereto.

Chapter V

FINANCIAL STATEMENTS

Article 19. Responsibilities of the Department of Debt Management and External Finance for the preparation and submission of financial statements

1. The Department of Debt Management and External Finance shall be responsible for the preparation and submission of quarterly or yearly financial statements.

2. List of financial statements that the Fund may use:

3. In addition to financial statements specified in the aforesaid list, the Department of Debt Management and External Finance may prepare other reports to meet management and administration needs of the Minister of Finance.

4. Sample reports and interpretation of the method for preparation of financial statement shall be regulated in the Appendix 04 “Financial statements” hereto.

Article 20. Requirements concerning preparation and representation of financial statements

1. A financial statement to be prepared must ensure integrity, objectivity, sufficiency, timeliness and must correctly reflect assets, liabilities, revenues or expenses of the Fund.

2. A financial statement must be prepared based on data obtained after an accounting record 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.

3. A financial statement must be signed and stamped by the preparer, chief accountant and the Director of Department of Debt Management and External Finance before being submitted to the competent authority or made known to the public in accordance with laws.

Article 21. Deadlines for submission of financial statement

1. Quarterly financial statements shall be submitted by the 10^thday of the initial month in the following quarter.

2. Yearly financial statements shall be submitted by March 31 of the year following the reporting year at the latest.

Chapter VI

IMPLEMENTATION ORGANIZATION

Article 22. Effect

1. This Circular takes effect on January 01, 2019.

2. This Circular shall replace the Circular No. 170/2014/TT-BTC dated November 14, 2014 providing guidance on the accounting system applied to the Fund.

Article 23. Implementation

The Director of the Accounting and Audit Management and Supervision Department, the Director of Department of Debt Management and External Finance and the heads of relevant entities shall be responsible for providing instructions for and implementing this Circular./.

For the Minister

The Deputy Minister

Do Hoang Anh Tuan 

* All Appendices are not translated herein.