Joint Circular 13/2005/TTLT-BTC-BLDTBXH criteria, conditions, procedures for appointment, removal, arrangement of salaries for chief accountants in business organizations

JOINT CIRCULAR

Guiding criteria, conditions, and procedures for appointment, removal, and arrangement of salaries for chief accountants and persons in charge of accounting work in business organizations

In the implementation of Articles 37 and 38 of the Government’s Decree No. 129/2004/ND-CP dated May 31, 2004, detailing and guiding the implementation of a number of provisions of the Accounting Law applicable in business activities, after consulting relevant ministries and agencies, the Ministry of Finance and the Ministry of Labor, Invalids and Social Affairs guides criteria, conditions, and procedures for appointment and removal and arrangement of salaries for chief accountants and persons in charge of accounting work in business organizations as follows:

I. SUBJECTS OF APPLICATION

This Circular applies to business organizations conducting accounting work as prescribed in Article 2 of the Government’s Decree No. 129/2004/ND-CP dated May 31, 2004 (hereinafter referred to as accounting units), including:

1. State-owned companies that operate under the Law on State Enterprises, include:

a) State-owned corporations (State-owned corporations established under the 1995 Law on State Enterprises and corporations invested and set up by the State under the 2003 Law on State Enterprises; corporations invested and set up by companies themselves; and State Capital and Investment Corporations);

b) Independent State-owned companies;

c) Independent-accounting members of corporations invested and set up by the State.

2. State-owned companies that operate according to the Law on Enterprises, include:

a) State-owned joint stock companies;

b) State-owned single-member limited liability companies;

c) State-owned limited liability companies with two or more members;

d) Enterprises in which the State holds controlling shares or contributed capital amounts;

dd) Enterprises with a State capital portion;

e) State-owned companies controlling other enterprises.

3. Organizations that conduct business activities according to the Law on Enterprises include:

a) Limited liability companies;

b) Joint stock companies;

c) Partnerships;

d) Sole proprietorships.

4. Foreign-invested enterprises that operate according to the Law on Foreign Investment in Vietnam.

5. Branches of foreign enterprises operating in Vietnam.

6. Representative offices of foreign enterprises operating in Vietnam.

7. Cooperatives that operate according to the Law on Cooperatives.

8. Individual business households and cooperative groups.

II. ARRANGING PERSONS TO WORK AS CHIEF ACCOUNTANTS OR PERSONS IN CHARGE OF ACCOUNTING WORK, HIRING CHIEF ACCOUNTANTS

1. Accounting units

Accounting units mean subjects specified in Section I of this Circular which perform accounting work and make financial statements according to the Accounting Law.

2. Arranging persons to work as chief accountants

Accounting units that are required to arrange persons to work as chief accountants include:

a) Accounting units specified at Points 1, 2, 3, 4, 5, and 7, Section I of this Circular;

b) Dependent-accounting companies of State corporations that are determined as accounting units;

c) Parent companies and subsidiary companies of corporations invested and set up by companies themselves, which are transformed according to the parent company-subsidiary company model;

d) For business organizations with multi-level accountancy, if the grassroots unit is the one with big accounting work volume; it is required to have two or more accountants.

Particularly for special State-owned enterprises direct serving national defense and security according to the Law on State Enterprises and the Government’s regulations, the arrangement of persons to work as chief accountants in domains under the management shall be prescribed by the Ministry of National Defense, the Ministry of Public Security, and the Government Cipher Committee after reaching an agreement with the Ministry of Finance.

3. Arranging persons in charge of accounting work

Units and organizations that are allowed to arrange persons in charge of accounting work include:

a) For accounting units specified at Point 2, if the post of the chief accountant is vacant, the heads of accounting units shall immediately arrange persons to work as chief accountants. In case there is no one eligible for being appointed as chief accountant, they shall be allowed to appoint persons in charge of accounting work for a maximum duration of one fiscal year, and then have to arrange persons to work as chief accountants.

b) Business organizations specified at Point 6 and Point 8, Section I of this Circular are not required to arrange persons to work as chief accountants but must appoint persons in charge of accounting work. People who are arranged to be in charge of accounting work in such cases may work in this position for the unrestricted duration.

4. Hiring chief accountants

Accounting units that are required to arrange persons to work as chief accountants as prescribed at Point 2 but cannot arrange chief accountants or persons in charge of accounting work yet, must hire chief accountants under Clause 2, Article 37 of the Decree No. 129/2004/ND-CP.

5. Relationship between chief accountants or persons in charge of accounting work and heads and deputy-heads of accounting divisions

a) Accounting units which have already appointed chief accountants or persons in charge of accounting work shall not appoint heads of accounting divisions or departments. Chief accountants or persons in charge of accounting work shall concurrently perform the tasks prescribed for heads of accounting divisions or departments.

b) In accounting units where financial and statistical work has not yet been separated, chief accountants or persons in charge of accounting work shall be also in charge of organizing and directing the financial and statistical work.

c) Units with big accounting work volume may concurrently appoint chief accountants and deputy-heads of accounting divisions (departments). Deputy heads of accounting divisions (departments) shall assist chief accountants.

III. CRITERIA AND CONDITIONS FOR BEING APPOINTED AS CHIEF ACCOUNTANTS OR PERSONS IN CHARGE OF ACCOUNTING WORK OR BEING HIRED TO WORK AS CHIEF ACCOUNTANTS

1. Criteria and conditions for being chief accountants

a) Chief accountants must satisfy the following criteria

- Regarding ethics: Possessing professional ethics, being honest, incorruptible, and having the sense of observance and protection of economic, financial principles, policies, and regimes as well as the State's law.

- Regarding specialized and professional qualifications:

+ Chief accountants of accounting units specified at Point 1, Point 2, Items a and b of Point 3 and Point 4, Section I of this Circular and chief accountants of subsidiary companies must have professional accountancy qualifications of collegial, university or higher level;

+ Chief accountants of accounting units specified at Items c and d of Point 3, Point 5, and Point 7, Section I of this Circular and chief accountants of dependent-accounting companies of corporations must have professional accountancy qualifications of an intermediate or higher level;

+ Chief accountants of superior accounting units with attached accounting sections, chief accountants of State corporations, and chief accountants of parent companies must have professional accountancy qualifications of university or higher level.

Vietnamese chief accountants working for foreign-invested enterprises established and operating in Vietnam must have foreign-language skills as required by the enterprises in service of transaction and working requirements.

- Regarding the duration of engaging in accounting work:

+ Chief accountants of accounting units specified at Points 1 and 2, Items a and b of Point 3, and Point 4, Section I of this Circular and chief accountants of subsidiary companies must have engaged in accounting work for at least two years if they have a university degree; in cases where they have professional accountancy qualifications of collegial level, they must have engaged in accounting work for at least three years;

+ Chief accountants of accounting units specified at Items c and d of Point 3, Point 5, and Point 7, Section I of this Circular and chief accountants of dependent-accounting companies of corporations must have engaged in accounting work for at least three years if they have professional accountancy qualifications of intermediate level; for persons who have professional accountancy qualifications of university or higher level, must have engaged in accounting work for at least two years;

+ Chief accountants of superior accounting units with attached accounting sections, chief accountants of State corporations, and chief accountants of parent companies must have engaged in accounting work for at least five years.

b) Chief accountants must satisfy the following conditions

- Satisfying the criteria prescribed at Item a, Point 1, Section III of this Circular;

- Having chief accountant-fostering certificates as prescribed in the Minister of Finance’s Decision No. 43/2004/QD-BTC dated April 26, 2004, or chief accountant-fostering certificates granted before the effective date of the Minister of Finance's Decision No. 43/2004/QD-BTC according to the Regulation on fostering and granting certificates to chief accountants, attached to the Decision No. 159 TC/CDKT dated September 15, 1989, and the Decision No. 769 TC/QD/TCCB dated October 23, 1997, of the Minister of Finance;

- Not falling into the cases banned from doing accounting work as prescribed in Article 51 of the Accounting Law.

c) Foreigners appointed to be chief accountants must satisfy the following criteria and conditions

Foreigners appointed to act as chief accountants in foreign-invested enterprises or Vietnamese enterprises must have accounting specialist’s certificates or accounting and audit certificates, issued by foreign organizations and recognized by the Ministry of Finance of Vietnam; or accounting practice certificates or auditor’s certificates issued by the Ministry of Finance of Vietnam; or chief accountant-fostering certificates as prescribed by the Ministry of Finance; have engaged in accounting work for at least two years including 01 year in Vietnam; not fall into the cases banned from doing accounting work as prescribed in Article 51 of the Accounting Law and be permitted to reside in Vietnam for 1 year or more.

2. Persons appointed to take charge of accounting work must satisfy the following criteria and conditions

Persons appointed to take charge of accounting work must fully satisfy the criteria on ethics and professional qualifications prescribed for chief accountants but have not yet satisfied the conditions on the duration of actually engaging in accounting work or not yet obtained chief accountant-fostering certificates as prescribed at Item b, Point 1.

3. Persons hired to work as chief accountants must satisfy the following criteria and conditions

Persons hired to work as chief accountants must fully satisfy the following criteria and conditions:

a) Having accounting practice certificates as prescribed in Article 57 of the Accounting Law or auditor's certificates as prescribed in Article 13 of the Government's Decree No. 105/2004/ND-CP dated March 30, 2004, on independent audit;

b) Having chief accountant-fostering certificates as prescribed by the Ministry of Finance;

c) Having registered for providing accounting services or registered for accounting or audit practice in the enterprises providing accounting or auditing services as prescribed by law;

d) Not falling into the cases banned from doing accounting work as prescribed in Article 51 of the Accounting Law.

IV. PROCEDURES FOR APPOINTMENT, REMOVAL, AND REPLACEMENT OF CHIEF ACCOUNTANTS OR PERSONS IN CHARGE OF ACCOUNTING WORK; HIRING OF CHIEF ACCOUNTANTS AND TERMINATION OF CONTRACTS WITH PERSONS HIRED TO WORK AS CHIEF ACCOUNTANTS

1. Procedures for appointment, removal, and replacement of chief accountants or persons in charge of accounting work

a) State-owned companies specified at Point 1, Section I of this Circular that request the appointment, removal, or replacement of chief accountants or persons in charge of accounting work, must make dossiers like those on the appointment of deputy-directors or deputy-general directors, for chief accountants; or dossiers on the appointment of heads of divisions or departments, for persons in charge of accounting work and send them to competent authorities under Clause 1, Article 25 and Clause 2, Article 40 of the Law on State Enterprises.

b) The appointment, removal, or replacement of chief accountants or persons in charge of accounting work of organizations specified at Point 2 and Point 3, Section I of this Circular as follows:

- Limited liability companies specified at Items b and c of Point 2 and Item a of Point 3, Section I of this Circular: comply with the company charters as decided by the Members’ Councils in accordance with Point dd, Clause 1, Article 35 of the Law on Enterprises;

- Joint-stock companies specified at Items a, d, dd and e of Point 2 and Item b of Point 3, Section I of this Circular: comply with Item e, Clause 2, Article 80 of the Law on Enterprises and the company charters as decided by the Board of Directors;

- Partnerships specified at Item c of Point 3, Section I of this Circular: comply with the company charters as decided by the Members’ Councils;

- Sole proprietorships specified at Item d, Point 3, Section I of this Circular: as decided by entrepreneurs;

c) The appointment, removal, or replacement of chief accountants or persons in charge of accounting work of foreign-invested enterprises and branches of foreign enterprises operating in Vietnam as specified at Points 4 and 5, Section I of this Circular as follows:

- Enterprises with 100% foreign capital and branches of foreign enterprises: shall be decided by project owners;

- Joint venture enterprises between Vietnamese and foreign parties:t shall be decided by their Board of Directors.

d) Cooperatives specified at Point 7, Section I of this Circular that request the appointment, removal, or replacement of chief accountants or persons in charge of accounting work must follow Point b, Clause 1, Article 27 of the Law on Cooperatives as decided by their Management Boards.

e) The appointment, removal, or replacement of persons in charge of accounting work or chief accountants (if any) of representative offices of foreign enterprises operating in Vietnam, individual business households, and cooperative groups as specified at Points 6 and 8, Section I of this Circular and grassroots accounting units of business organizations with multi-level accountancy shall be decided by at-law representatives of such accounting units.

2. Procedures for signing and termination of contracts on hiring persons to work as chief accountants

a) The hiring of persons to work as chief accountants in enterprises and cooperatives being accounting units, which are required to arrange persons to work as chief accountants but cannot arrange, and hire them instead, must be decided by authorities competent to appoint chief accountants as prescribed at Point 1;

b) Expenses for hiring persons to work as chief accountants shall be agreed upon in service contracts with enterprises providing accounting or auditing services or contracts signed directly with to-be-hired persons who have registered to provide accounting services.

c) For enterprises and cooperatives being accounting units, which hire persons to work as chief accountants, if the hired ones breach contractual terms, the contracts shall be terminated. Procedures for termination of contracts on hiring persons to work as chief accountants shall be carried out similarly to procedures for signing contracts on hiring persons to work as chief accountants with enterprises providing accounting or auditing services or hired persons.

V. SALARIES FOR CHIEF ACCOUNTANTS AND PERSONS IN CHARGE OF ACCOUNTING WORK

1. Chief accountants of State-owned companies specified at Point 1, Section I of this Circular shall enjoy the position-based salaries arranged according to their companies' grades prescribed in the salary tables applicable to general directors, directors, deputy general directors, and chief accountants, attached to the Government's Decree No. 205/2004/ND-CP dated December 14, 2004.

In cases the above-mentioned State-owned companies appoint persons in charge of accounting work, such persons shall enjoy professional salaries and position allowances like heads of divisions of enterprises of similar grades as prescribed at Item 6, Article 3 of the Government’s Decree No. 205/2004/ND-CP dated December 14, 2004.

2. Salaries of chief accountants and persons in charge of accounting work in business organizations specified at Points 2, 3, 4, 5, and 7, Section I of this Circular shall be agreed upon by both parties as stated in labor contracts according to salary scales and tables as decided by such enterprises or cooperatives.

3. The salaries of persons in charge of accounting work or chief accountants of business organizations specified at Points 6 and 8, Section I of this Circular, which must arrange persons in charge of accounting work or chief accountants (if any), shall be agreed upon by both parties as stated in labor contracts.

VI. IMPLEMENTATION ORGANIZATION

1. Accounting units shall

a) Appoint persons fully satisfying the criteria and conditions to work as chief accountants or persons in charge of accounting work under the Decree No. 129/2004/ND-CP and this Circular;

b) Comply with the procedures for appointment, removal, and replacement of chief accountants or persons in charge of accounting work according to this Circular;

c) Decide on hiring chief accountants according to this Circular.

2. Line ministries and People’s Committees of provinces and centrally run cities shall

a) Direct and guide business organizations to review the chief accountants; arrange and carry out procedures for the appointment, removal, replacement of, and the arrangement of salaries for, chief accountants or persons in charge of accounting work, hire persons to work as chief accountants according to the State’s regulations;

b) Coordinate with finance and accounting academies, universities and colleges, and Vietnam Accounting and Audit Association in organizing chief accountant-fostering courses serving the appointment of chief accountants.

c) Accounting units that already have heads of accounting divisions or departments may appoint chief accountants provided that such persons fully satisfy prescribed criteria and conditions; if not, they shall be shifted to work as persons in charge of accounting work.

3. The Ministry of Finance shall

a) Preside the studying and guide the criteria, conditions, and procedures for the appointment, removal, and replacement of chief accountants or persons in charge of accounting work, the hiring of persons to work as chief accountants according to the Accounting Law;

b) Coordinate with the Ministry of Labor, Invalids, and Social Affairs in inspecting the appointment, removal, and replacement of, and arrangement of salaries for, chief accountants or persons in charge of accounting work, and hiring of persons to work as chief accountants in business organizations under this Circular.

VII. IMPLEMENTATION PROVISIONS

1. Based on this Circular, line ministries and People’s Committees of provinces and centrally run cities shall direct business organizations to appoint, remove and replace and arrange salaries for chief accountants or persons in charge of accounting work, and hire persons to work as chief accountants according to the State’s regulations.

2. This Circular takes effect after 15 days from the date of its publication in the Official Gazette. This Circular repeals the Circular No. 64-TT/LB dated December 12, 1990, of the Ministry of Finance and the Ministry of Labor, Invalids and Social Affairs, guiding the appointment of, and arrangement of salaries for, chief accountants and deputy-chief accountants in State-owned factories.

Any difficulties in the course of implementation shall be reported to the Ministry of Finance and the Ministry of Labor, Invalids, and Social Affairs for consideration and settlement./.