Circular No. 49/2014/TT-NHNN dated December 31, 2014 of the State Bank of Vietnam on amending and supplementing a number of Articles in the financial reporting policies applicable to credit institutions issued together with Decision No. 16/2007/QD-NHNN and the accounts systems of credit institutions issued together with Decision No. 479/2004/QD-NHNN of the Governor of the State Bank

THE STATE BANK OF VIETNAM

Circular No.  49/2014/TT-NHNN dated December 31, 2014 of the State Bank of Vietnam on amending and supplementing a number of Articles in the financial reporting policies applicable to credit institutions issued together with Decision No. 16/2007/QD-NHNN and the accounts systems of credit institutions issued together with Decision No. 479/2004/QD-NHNN of the Governor of the State Bank

Pursuant to the Law on the State bank of Vietnam No. 46/2010/QH12 dated June 16, 2010;

Pursuant to the Law on credit institutions No. 47/2010/QH12 dated June 16, 2010;

Pursuant to the Law on accounting No. 03/2003/QH11 dated June 17, 2003;

Pursuant to the Government’s Decree No. 156/2013/ND-CP dated November 11, 2013 defining the functions, tasks, powers and organizational structure of the State Bank of Vietnam;

At the request of the Director of the Department of Finance and Accounting;

The Governor of the State bank of Vietnam hereby issues the Circular on amendments and supplements to a number of articles in the accounting policies applicable to credit institutions issued together with Decision No. 16/2007/QD-NHNN dated April 18, 2007 and the accounts systems of credit institutions issued together with Decision No. 479/2004/QD-NHNN dated April 29, 2004 of the Governor of the State Bank.

Article 1.Amendments and supplements to a number of articles in the financial reporting policies applicable to credit institutions issued together with Decision No. 16/2007/QD-NHNN dated April 18, 2007 of the Governor of the State Bank

1. Clause 1 and 4 Article 1 is amended as follows:

“1. This document provides for the content and method of preparation, presentation and other contents related to financial statements of credit institutions and branches of foreign banks established, organized and operated in accordance with the Law on credit institutions, except for people’s credit funds and microfinance institutions.

Financial statements of credit institutions (hereinafter referred to as financial statements) are the reports prepared in accordance with the Vietnamese Accounting Standards, accounting policies and other related law provisions to reflect major economic and financial information of credit institutions. The structured manner of financial statements for credit institutions includes: balance sheet, income statement, cash flow statement and notes to financial statement.”

“4. The financial reporting policy applicable to people’s credit funds and microfinance institutions shall be guided by the State bank of Vietnam (hereinafter referred to as “State Bank”) in another document on the basis of applying this financial reporting document in accordance with the operational characteristics of people’s credit funds and microfinance institutions.”

2. Article 2 is amended as follows:

“Article 2. Definitions

In this document, these terms are construed as follows:

1. Credit institution includes banks, non-bank credit institutions and branches of foreign banks (hereinafter referred to as CIs).

2. Units of CI: affiliated entities of a CI, including headquarter/head office (hereinafter referred to as headquarter), transaction departments while they have not yet transferred into branches as specified by the State bank, branches and affiliated entities without legal status.

3. Parent company: a CI which has one or several subsidiaries.

4. Subsidiary: enterprises specified in the cases mentioned in Clause 30 Article 4 of the Law on credit institutions.

5. Associate company of a CI: enterprises specified in Clause 29 Article 4 of the Law on credit institutions.

6. CI group includes the CI as a parent company and its subsidiary(ies).

7. Financial statement: the financial statement prepared by a CI on the basis of aggregating data within the entire system of the CI (including headquarter, transaction department, subsidiaries andaffiliated entities doing dependent cost-accounting) to reflect the economic and financial information of the CI.

8. Consolidated financial statement: the financial statement prepared on the basis of consolidating the financial statement of the CI and financial statements of subsidiaries to reflect the economic and financial information of the CI.

9. General financial statement: the financial statement prepared on the basis of aggregating data of accounting units operating and accounting separately in the same field/group of CI to reflect the economic and financial information of all members in the same field/group of such CI.

10. Examined semi-annual financial statement: the interim financial statement of the CI, the interim consolidated/general financial statement prepared by the CI in the second quarter of the fiscal year and examined by an approved independent audit firm.

11. Electronic report: the report that is converted into electronic data life and transmitted via a computer network. The electronic report must bear a digital signature of the legal representative of the CI and comply with the symbol, transmission code and file structure promulgated by the State bank.”

3. Article 3 is amended as follows:

“Article 3. Principles of financial statement preparation

The preparation and presentation of financial statements shall comply with the principles stipulated in Vietnam Accounting Standards on presentation of financial statements, including: going concern, accrual basis, consistency, materiality and aggregation, offsetting, comparability and additional principles stipulated in the Vietnam Accounting Standard on supplementary contents of financial statements of banks and similar financial institutions and other related law provisions.”

4. Point b Clause 1 Article 6 is amended as follows:

“b) In the cases specified in Clause 5 Article 89 of the Law on credit institutions, the main branch of the foreign bank (The branch with the general director (director) authorized by the foreign bank to be accountable to all activities of branches of the foreign bank in Vietnam) shall aggregate all data of the branches operating in Vietnam to prepare the general financial statement in accordance with provisions in Section 3 Chapter II of this document and take legal responsibility for the data of the general financial statement.”

5. Article 7 is amended as follows:

“Article 7. Time limit for submission of financial statements

1. Annual financial statements

a) Unaudited annual financial statement

- The unaudited annual financial statement of the CI shall be submitted within 45 days from the end of the fiscal year;

- The unaudited annual consolidated financial statement of the CI shall be submitted within 60 days from the end of the fiscal year.

b) Audited financial statements

The CI shall submit its audited annual financial statement enclosed with the conclusion made by an independent audit firm (audit report; management letter and related documents) within 90 days from the end of the fiscal year.

2. Interim financial statements

a) The deadline for submission of the interim financial statement of the CI shall be by the 30^thof the first month of the following quarter;

b) Examined semi-annual financial statements

Apart from the interim financial statements specified in Point a of this Clause, the CI being a listed organization or large-scale public company shall submit:

- Examined semi-annual financial statement of the CI enclosed with the whole examine report for the financial statement within 45 days from the end of the first 06 months of the fiscal year;

- Consolidated semi-annual financial statement or examined general semi-annual financial statement enclosed with the whole examine report and semi-annual financial statement of the CI shall be submitted within 60 days from the end of the first 06 months of the fiscal year if the CI is a listed organization or large-scale public company that is required to prepare the consolidated semi-annual financial statement or general semi-annual financial statement.

3. Financial statements with different term

If the CI must prepare financial statements according to the provisions in Clause 3 Article 5 of this document, the CI must submit the financial statements in accordance with the guidance of the State bank in a case-by-case basis.

4. If the deadline for submission of financial statements falls on a public holiday or weekend, it will be automatically extended to the succeeding working day.”

6. Article 8 is amended as follows:

“Article 8. Receiving authorities

7. Article 9 is amended as follows:

“Article 9. Preparation and submission of trial balances

1. Trial balance is an accounting report reflecting the financial status and operation of the CI and/or its units (Form A01/TCTD).

2. Requirements for the preparation of trial balances

a) If income and expenses arise from transactions between units of CI in the same system, the CI shall attach a statement of these incomes and expenses when preparing and submitting the trial balance;

b) Except for the trial balance of December (or the last month of the annual accounting period in accordance with law provisions), CIs and units of CIs shall prepare and submit the reports when the incomes and expenses have yet been calculated to determine business results but the “exchange rate difference”, “gold, silver and precious stone” and “difference in asset re-evaluation” accounts are dissolved at the end of the fiscal year according to effective policy;

c) If the CI is the parent company: Apart from the preparation and submission of trial balance, the CI shall enclose the trial balances of subsidiaries upon request of the regulatory body;

d) Only electronic trial balances shall be submitted to the State bank.

3. Deadlines for submission of trial balances

Monthly, CIs and units of CIs shall prepare and submit the trial balances on the 7^thof the following month.

If the deadline for submission of trial balances falls on a public holiday or weekend, it will be automatically extended to the succeeding working day.

4. The procedures for submission of trial balances to the State bank are the same as those for submission of financial statements and trial balances specified in Article 10 of this document.”

8. Article 10 is amended as follows:

“Article 10. Procedure for submission of financial statements and trial balances

1. Procedure for submission of electronic financial statements and trial balances to the State bank

a) Banks and non-bank CIs

a.1. Headquarters of CIs more than 50% of the charter capital of which is held by the State and cooperative banks located in northern provinces (from Thua Thien Hue province northwards) shall have their networks connected with the Information Technology Administration. Head quarters of CIs more than 50% of the charter capital of which is held by the State located in southern provinces (from Da Nang city southwards) shall have their networks connected with the Ho Chi Minh city office of Information Technology Administration to submit the following reports: trial balances of the headquarters; trial balances of CIs; financial statements;

a.2. Headquarters of CIs not specified in Point a.1 this Clause shall have their networks connected to the branches of State Bank of provinces and central-affiliated cities (where they located) to submit the following reports: trial balances of the head quarters; trial balances of CIs and financial statements;

a.3. Transaction departments, subsidiaries and units doing dependent cost-accounting shall have their networks connected to the branches of State Bank of provinces and central-affiliated cities (where they located) to submit the trial balances of the CI units;

b) Branches of foreign banks

b.1. Main branches of foreign banks shall have their networks connected to the branches of State Bank of provinces and central-affiliated cities (where they located) to submit the following reports: trial balances of the main branches and financial statements.

Branches of foreign banks that have main branches but are not main branches shall have their networks connected to the branches of State Bank of provinces and central-affiliated cities (where they located) to submit the following reports: trial balances of the CIs and financial statements.

b.2. Branches of foreign banks not specified in Point b Clause 1 Article 6 of this document shall have their networks connected to the branches of State Bank of provinces and central-affiliated cities (where they located) to submit the following reports: trial balances of CIs and financial statements.

2. Procedure for submission of physical financial statements to the State bank

a) CIs shall submit their physical unaudited annual financial statements and interim financial statements to the State bank (01 copy each type to the bank supervision and inspection agency);

b) CIs shall submit their audited annual financial statements and the conclusions of the independent audit firms; examined semi-annual financial statements (if the CI is a listed organization or large-scale public company) and financial statements with different term (if any) in writing to the State bank (02 copies each type to the bank supervision and inspection agency, 01 copy each type to the State banks of provinces and central-affiliated cities where their head quarters located).

3. The submission of financial statements to the finance authority, tax authority and statistical authority shall be implemented in accordance with relevant law provisions and the guidance of such authorities.

4. Procedure for submission of reports within the CIs guided by the CIs

5. If the State bank changes its network which leads to changes in the procedure for submission and receipt of electronic reports specified in Clause 1 this Article, the State bank shall guide the procedure for submission of electronic Financial statements and trial balances in accordance with the changes of the network.”

9. Article 11 is amended as follows:

“Article 11. Responsibilities of the CI

1. Legal representatives of CIs shall prepare and present financial statements, at the same time take responsibility for the accuracy, adequacy and truthfulness of the information stated in their financial statements and trial balances.

2. CIs and units of CIs shall:

a) Prepare and submit sufficiently and timely the financial statements and trial balances in accordance with this document;

b) Append the signature and seal on the physical financial statements in accordance with law provisions;

c) Keep confidentiality when transmitting the encrypted electronic financial statements and trial balances via computer network in accordance with effective provisions of the State bank on transmission and receipt of information and report via internet;

d) If the CIs or units of CIs receive the physical inspection of financial statements and trial balances containing errors from the report receiving authorities, they shall review and examine the reports again and if there is any error, they shall immediately correct it by canceling the report containing errors and prepare a correct report to re-submit to the receiving authority; or if the CIs, units of CIs detect the error themselves, they must correct it in a timely manner and re-submit it to the report receiving authorities.

When submitting the revised report, it shall be attached with an explanation of the corrected error (in electronic form regarding trial balance, in physical and electronic form regarding the financial statement) to the receiving authority.

3. The main branches specified in Point b Clause 1 Article 6 of this document shall notify the State bank (the bank supervision and inspection agency) on the authorization to be the main branch.”

10. Article 12 is amended as follows:

“Article 12. Responsibilities of units affiliated to the State bank

1. State banks of provinces and central-affiliated cities shall

a) Receive electronic financial statements and trial balances in accordance with Point a.2, a.3 and b Clause 1 Article 10 of this document; inspect the numeral accuracy of the reports; promptly report to the receiving authority upon any error to amend, re-submit and transmit it to the Information Technology Administration;

b) Receive physical financial statements in accordance with Point b Clause 2 Article 10 of this document;

c) Urge the CIs and units of CIs as specified in Point a.2, a.3 and b Clause 1 Article 10 of this document to promptly and adequately send the financial statements and trial balances;

d) Use data and information in the financial statements and trial balances; manage and store the reports in accordance with law provisions;

dd) Inspect, monitor the implementation of this document and handle violations within their competence.

2. Information Technology Branch shall

Receive electronic financial statements and trial balances of CIs more than 50% of the charter capital of which is held by the State located in northern provinces in accordance with Point a.1 Clause 1 Article 10 of this document; inspect the numeral accuracy of the reports; promptly report to the receiving authority upon any error to amend, re-submit and transmit it to the Information Technology Administration;

3. Information Technology Administration shall

a) Receive financial statements and trial balances of CIs, State bank of provinces and central-affiliated cities and offices of Information Technology Administration transmitted via networks;

b) Inspect the numeral accuracy of the electronic reports; promptly report to the receiving authority upon any error to amend, re-submit and notify relevant departments, authorities and agencies;

c) Collect and synthesize the norms on the reports upon the demand for exploitation and use of related departments, authorities and units affiliated to the State bank;

d) Guide the CIs, State banks of provinces and central-affiliated cities, related Departments, authorities and units affiliated to the State bank in the transmission, receipt and use of report data via network in accordance with law provisions;

dd) Ensure continuous, timely, accurate, safe and confidential transmission of data; organize safe and confidential storage of report data.

4. Department of Finance and Accounting shall

Guide the implementation of this document.

5. Bank supervision and inspection agency shall

a) Receive physical financial statements of CIs; share the information with relevant departments, authorities and agencies within the ambit of their assigned functions;

b) Inspect the numeral accuracy of the physical financial statements; promptly report to the receiving authority upon any error to amend, re-submit and notify relevant departments, authorities and agencies; organize safe and confidential storage of report data;

c) Urge the CIs more than 50% of the charter capital of which is held by the State as specified in Point a.1 Clause 1 Article 10 of this document to promptly and adequately send the financial statements and trial balances;

d) Inspect, monitor the implementation of this document and handle violations within their competence.

6. Related Departments, authorities and units affiliated to the State bank shall

Based on the functions and tasks assigned by the Governor of State bank, register in writing with the Information Technology Administration and the Bank supervision and inspection agency  to use the reports of CIs upon specific demand and take responsibilities in management, use and security of information of the reports within their units in accordance with law provisions.”

11. Article 14 is amended as follows:

“Article 14. Disclosure of financial statements

1. Disclosing entities

a) All CIs must disclose their annual financial statements audited by independent audit firms;

b) CIs more than 50% of the charter capital of which is held by the State and CIs being listed organizations, large-scale public companies shall disclose their complete interim financial statements in accordance with law provisions. Other CIs voluntarily publicizing their interim financial statements may choose between complete interim financial statements or summary ones to disclose.

2. Form, content and time limit for disclosure of financial statements

a) Form of disclosure

- Annual financial statement: Post on the website or at the headquarter and branches of the CI and on 01 issue of a nationwide paper;

- Semi-annual and interim financial statement: Post on the website or at the headquarter and branches of the CI.

The CIs are encouraged to disclose the financial statements in the form of publication distribution (annual report) of CI; and other form of disclosure in accordance with effective law provisions.

b) Contents to be disclosed

The CI must disclose the following contents at the least: Audited financial statement including balance sheet, income statement and audit report regarding annual financial statement; balance sheet and income statement regarding interim financial statement. CIs which are parent companies shall disclose the formats of consolidated financial statements;

The CIs are encouraged to disclose the formats of the financial statements including: balance sheet, income statement, cash flow statement and notes to financial statement.

c) Disclosure time limit

- The annual financial statements shall be disclosed within 90 days regarding CIs being listed organizations, large-scale public companies and within 120 days regarding other CIs from the end of the fiscal year of such CIs.

- The time limit for disclosure of interim financial statements of CIs being listed organizations, large-scale public companies shall comply with law provisions on information disclosure on securities market and be within 45 days regarding other CIs from the end of the quarter.

b) Apart from the disclosure specified in Point a, b and c this Clause,  CIs being issuers, public companies, listed organizations, large-scale public companies and CIs more than 50% of the charter capital of which is held by the State shall disclose their financial statements in accordance with relevant law provisions.

3. The CIs shall answer questions upon request of the users of financial statements (regulatory bodies, shareholders, customers and other entities) in accordance with law provisions.

4. Cases that affect the disclosure of financial statements such as delay of information disclosure, failure to disclose a part or all of the information on financial statements, etc. shall be reviewed and decided by the Governor of the State bank.

5. Within 10 working days from the disclosure of financial statement in accordance with this document, the CIs shall send a confirmation/notice on their disclosure of financial statements to the State bank (the Bank supervision and inspection agency).”

12. Article 16 is amended as follows:

“Article 16. Entities responsible for making financial statements

All CIs must prepare financial statements.”

13. Forms No. A01/TCTD, B02/TCTD, B02/TCTD-HN, B03/TCTD, B03/TCTD-HN, B04/TCTD, B04/TCTD-HN, B05/TCTD, B05/TCTD-HN, B02a/TCTD, B02a/TCTD-HN, B03a/TCTD, B03a/TCTD-HN, B04a/TCTD, B04a/TCTD-HN, B05a/TCTD, B05a/TCTD-HN, B02b/TCTD, B02b/TCTD-HN, B03b/TCTD, B03b/TCTD-HN, B04b/TCTD, B04b/TCTD-HN enclosed with Decision No. 16/2007/QD-NHNN are respectively replaced with the forms enclosed with this Circular.

Article 2.Amendments and supplements to a number of contents in the chart of accounts applicable to credit institutions issued together with Decision No. 479/2004/QD-NHNN dated April 29, 2004 of the Governor of the State Bank

1. Section II- Chart of accounts (amended in Clause 2 Article 2 of Circular No. 10/2014/TT-NHNN dated March 20, 2014 of the State bank) is amended as follows:

The name of account 8823 – “Provision for decline of securities price” is changed into “Provision for securities risks”.

Account 3929 – “Other receivables from securities” is added.

2. Account 341 – Investments in subsidiaries in VND and Account 345 – Investment in subsidiaries in foreign currency (amended in Clause 20 Article 2 of Circular No. 10/2014/TT-NHNN dated March 20, 2014 of the State bank) are amended as follows:

“Account 341 – Investments in subsidiaries in VND

“Account 345 – Investments in subsidiaries in foreign currency

This account is used for reflecting the present value and changes of capital contributions in subsidiaries. A subsidiary is a company that is specified in Clause 30 Article 4 of the Law on credit institutions.

Recognition on this account shall be in accordance with the Vietnamese Accounting Standard No. 25 – Consolidated financial statements and the following regulations:

1. Investments in subsidiaries shall be reflected according to the original cost, including purchase price plus purchase costs (if any) such as: costs for brokerage, transaction, fees, taxes and banking charges, etc.

2. Accounting of transactions arising during the business consolidation of the company who is defined as the buyer in case of business consolidation that results in parent-subsidiary relationship shall be in accordance with the Vietnamese Accounting Standard No. 11 – Business Consolidation and the Circular guiding this document.

3. The accountant shall open special journals to follow the investment in each subsidiary by par value, actual purchase price and actual cost of investment in subsidiaries.

4. The incomes from subsidiaries (share interest, business interest) of the fiscal year shall be promptly and timely recorded to the separate financial statement of the parent company. Dividends and profits distributed from subsidiaries shall be recorded to Account 78 – Incomes from capital contribution and share purchase.

5. In case of capital contribution and investment in subsidiaries in foreign currency, the CI shall convert it into the functional currency based on the exchange rate in effect of the time of capital contribution. The CI shall not revaluate the capital contribution, even if the exchange rate difference is for recording an increase or decrease in capital contribution.

3. Account 343 – Investments in associate companies in VND and Account 347 – Investment in associate companies in foreign currency (amended in Clause 20 Article 2 of Circular No. 10/2014/TT-NHNN dated March 20, 2014 of the State bank) are amended as follows:

“Account 343 – Investments in associate companies in VND

“Account 347 – Investments in associate companies in foreign currency

This account is used for reflecting the value of the direct investment by the investor in an associate company and changes of investments in associate companies. An associate company is a company that is specified in Clause 29 Article 4 of the Law on credit institutions.

Recognition on this account shall be in accordance with the following regulations:

1. Recognition of the investment in associate company upon preparing and presenting the separate financial statement of the investor shall be carried out in accordance with the historical cost method. In recognition of investment in associate company under historical cost method, the value of the investment shall not be changed during the investment period, unless the investor purchases more or liquidate a part of all of such investment or receives benefits other than distributed profits,

2. Historical cost of the investment shall be defined as follows:

- The historical cost of the investment in associate company shall include the contributed capital or actual purchase price of the investment plus purchase costs (if any) such as: costs for brokerage, transaction, fees, taxes, etc.

- In case of contributing capital in associate company in fixed assets, materials and goods, the historical cost of the investment shall be recorded in accordance with the value that is unanimously valuated by the capital contributors. The difference between the book value and the re-evaluated value shall be recorded as follows:

+ The positive difference between the book value/remaining value and the re-evaluated value of the fixed asset shall be recorded into other incomes.

+ The negative difference between the book value/remaining value and the re-evaluated value of the fixed asset shall be recorded into other expenses.

3. The accountant shall open special journals to follow the value of the investment in each associate company. Bases for recognition of the investment in associate company in accounting journals shall be as follows:

- Regarding the investments in listed joint-stock companies, the recognition by the investor shall be based on the actual paid amount when purchasing the shares, including costs directly related to the share purchase and the official notice from the Securities Exchange on the purchase of shares of the associate company owned by the investor;

- Regarding the investments in unlisted joint-stock companies, the recognition by the investor shall be based on the ownership certificate to the shares and the receipt of money from sale of shares of the invested company or the documents for purchase of such investments;

- Regarding investments in other types of enterprises, the recognition shall be based on the minutes of capital contribution, profit (loss) distribution agreed upon by the parties or the documents for purchase or sale of such investments;

- The investor shall only record the dividends and profits distributed from associate companies when receiving official notices from the associate companies on the amount of dividends to be received or profits to be distributed in the period.

4. In case of capital contribution in associate companies in foreign currency, the CI shall convert it into the functional currency based on the exchange rate in effect of the time of capital contribution. The CI shall not revaluate the capital contribution, even if the exchange rate difference is for recording an increase or decrease in capital contribution.

4. Account 3599 – Provision for doubtful debts (amended in Clause 22 Article 2 of Circular No. 10/2014/TT-NHNN dated March 20, 2014 of the State bank) is amended as follows:

“Account 3599 – Provision for doubtful debts

This account is used for reflecting the making, settlement and reversal of provision for doubtful debts in accordance with law provisions for receivables that are not classified as high-risk assets.

5. Account 3929 – Other receivables from securities is added to Account 392 – Interest receivable from securities investment as a tier III account.

Article 3. Effect

This Circular takes effect from February 15, 2015.

Article 4. Organization of implementation

Chief of Office, Director of the Department of Finance and Accounting, heads of relevant entities affiliated to the State Bank, Directors of branches of the State Bank of provinces and central-affiliated cities, Presidents of the Boards of Directors, Presidents of the Member assembly and Directors General (Directors) of credit institutions shall implement this Circular./.

For the Governor

The Deputy Governor

Dao Minh Tu