Circular 53/2006/TT-BTC guidance on the application of management accounting in enterprises

CIRCULAR

Providing guidance on the application of management accounting in enterprises

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

Pursuant to the Government's Decree No. 129/2004/ND-CP dated May 31, 2004, detailing and guiding the implementation of a number of articles of the accounting law, applicable to business activities;

Pursuant to the Government's Decree No. 77/2003/ND-CP dated July 01, 2003, defining the functions, tasks, powers and organizational structure of the Ministry of Finance.

With the purpose of producing and trading, enterprises shall organize well their management accounting, the Ministry of Finance guides the management accounting in enterprises as follows:

Part I

GENERAL PROVISIONS

1. Management accounting

a) Management accounting is the collection, process, analysis and provision of economic and financial information according to administrative requirements and economic and financial decision of accounting units (Clause 3 Article 4 of the Accounting Law)

Management accounting shall provide information on the internal operation of enterprises such as: cost of each unit (cost center), each job, and product; analysis and assessment of the implementation situation with the plan on revenues, costs and profits; management of assets, supplies, capital, and debts; analysis of the relationship between costs, volume and profits; selection of appropriate information for short-term and long-term investment decisions; preparing production and business budget estimates; etc to serve administration, inspection and making economic decision. Management accounting shall be the job of each enterprise. The State shall only guide principles, measures of organization, and the main contents and methods of management accounting to create favorable conditions for enterprises to implement.

b) Subjects receiving information of management accounting shall be the enterprise's leadership and people involved in managing and operating the enterprise's production and business activities.

Enterprises shall be not required to disclose information of management accounting unless otherwise prescribed by law.

c) Units of calculation used in management accounting, including: the monetary unit; the kind unit; labor time or other units according to management requirements of enterprises.

d) Principles for organizing management accounting information systems: the organization of a management accounting information system shall be not required to fully comply with accounting principles and can be implemented according to the internal regulations of the enterprise to create an appropriate management information system according to the specific management requirements of each enterprise. Enterprises shall have fully authority to decide on the application of accounting documents, organize the system of accounting books, apply and detail book-keeping accounts, and design report templates of necessary management accounting to serve their unit's management accounting.

dd) Enterprises shall use all information and data from the financial accounting section to coordinate and serve management accounting.

2. Subjects of application

This Circular shall apply to enterprises in the fields of production, business, trade and services.

For enterprises in the field of finance and banking, such as insurance companies, securities companies, securities investment fund management companies, credit institutions, financial institutions, etc shall apply contents consistent with the instructions in this Circular.

3. Tasks of management accounting in enterprises

a) Collecting, processing information and data of accounting according to the scope and content of management accounting of the unit determined by each period.

b) Inspecting, supervising norms, standards and estimates.

c) Providing information according to the unit's internal management requirements by using reports of management accounting.

d) Organizing and analyzing information to serve the planning and decision-making requirements of the leadership’s enterprises.

4. The content, scope and period of management accounting

4.1. The content of management accounting

a) Main and popular contents of management accounting in enterprises, including:

- Management accounting of costs and prices of products;

- Management accounting of selling and business results;

- Analyzing the relationship between costs, volumes and profits;

- Selecting appropriate information for making decisions;

- Preparing budget estimates of production and business;

- Management accounting for other items:

+ Management accounting of fixed asset;

+ Management accounting of inventory;

+ Management accounting of labor and salary;

+ Management accounting of debts.

b) In addition to main contents mentioned above, enterprises shall implement other contents of management accounting according to the management requirements of enterprises.

4.2. The scope of management accounting shall be not limited and be determined by the enterprise's need for information about management accounting in all stages of the process of organization, production management, business, planning, inspecting, organizing, operating, making decisions and the qualifications and ability to organize the work of management accounting of each enterprise.

4.3. Management accounting periods shall be months, quarters, and years like financial accounting periods. Enterprises shall decide on another management accounting period (can be daily, weekly or any period) according to their requirements.

5. The terms in this Circular are construed as follows:

- Responsibility center: is a department (a plant, a production line; a department; a company or the entire company) in an organization where the manager has the authority to operate and take responsibility for costs, incurred income or investment capital used in business operations.

- Cost center: is a responsibility center where the manager only has the right to manage costs incurred by the department under their management. A cost center can be a department (a plant, a team, etc) or each operating stage (roughing stage, cutting stage, polishing stage, etc).

- Differential cost: is the cost that exists in this option but is absent or only partly present in another option. Cost difference is one of the important bases for choosing investment plans or plans of production and business.

- Opportunity cost: is the potential benefit lost due to choosing a plan (or an action) instead of choosing another option plan (or the action).

- Sunk cost: is a type of cost that an enterprise will have to bear regardless of the selection of plan or action. The sunk cost exists in all plans, so there are no differences and are not considered when comparing and choosing the optimal plan or action.

- Variable cost: is production and business costs that change proportionally in total, in proportion to changes in product volume, including: raw material costs, direct materials, direct labor costs and some general production costs, such as: Labor costs, electricity and water costs, machine repair parts, etc. Variable costs do not change when calculating for a unit of product or work.

- Fixed cost: is cost whose total amount does not change with changes in the volume of products and work, including: depreciation costs of fixed assets, salaries of employees and management officers, etc. The fixed cost of a unit of product or work is inversely proportional to the volume, product, and work.

- Profit on variable cost: is the difference between revernues and total variable costs (including production costs according to variable costs, variable selling costs, variable costs of business management).

- Break-even point: is a point that total revernue equals total costs or a point at which profit on variable costs equals total fixed costs.

- Short-term decision: is a business decision whose validity period, influence period and implementation that is usually less than one year or shorter than one business cycle such as: decision on the existence or elimination of a business department in the planning period; decision on a plan to self-produce or purchase of raw materials and products; decision on selling at the semi-finished product stage or the finished product stage;...).

- Long-term decision: is a decision whose validity period, influence period and implementation are longer than one year or one business period (Example such as a decision on investment fixed assets in enterprises; a decisions on long-term financial investment; etc.)

- Appropriate information: is information that shall satisfy two basic standards:

+ That information shall be related to the future;

+ That information shall have differences between plans being considered and selected.

Part II

THE ORGANIZATION OF THE IMPLEMENTATION 

OF MANAGEMENT ACCOUNTING

1. The organization of the implementation of management accounting in enterprises shall have the following requirements:

a) Punctually and fully providing the information according to management requirements on the cost for each work, division, project and product, etc;

b) Punctually and fully providing the information of implementation, norms, unit prices, etc to make the plan, inspect, manage and make the decision;

c) Ensuring to provide information that is more detailed and specific than financial accounting;

d) Establishing appropriate principles and methods to ensure comparability between financial accounting and management accounting as well as among the operating periods, between the estimate and the implementation.

2. The organization of the implementation of management accounting in enterprises has the following contents: applying accounting documents, accounting accounts, accounting books; making reports on management accounting and analyzing economic and financial information.

3. Principles for organizing and applying accounting documents

a) Applying principles and methods to make, rotate, manage and use accounting documents appropriate to specific conditions of enterprises.

b) Specifying and adding necessary contents to each prescribed accounting document form to serve the collection of the information of internal corporate management.

c) Using initial documents and statistical documents in operating production and business of the enterprise (production orders; quantity lists; decisions to mobilize labor; decisions to mobilize (move) assets; reports of investigation of production situation, etc.) for management of product volume (work), labor time, and planning.

d) Designing and using internal documents for management accounting without State regulations (allocation spreadsheet of selling costs, business management costs, etc.); establishing a system to collect and provide quickly and promptly information via email, fax and other means of information.

4. Principles for the organization and applying accounting accounts

4.1. Enterprises shall base on the accounting account system issued by the Ministry of Finance or approved by the Ministry of Finance to apply to enterprises to detail levels (level 2, 3, 4) in accordance with made plans, estimates and requests for providing information of management accounting in the enterprise.

4.2. The detailing of levels of accounting accounts based on the following requirements:

a) Originating from the requirement to provide information of management accounting of each level of management.

b) Ensuring consistency in symbols, levels, etc with accounts that have a relationship with each other (For example: Account 15411, 51111, 63211, 91111, etc.).

c) Detailing an account shall not distort the content, structure and recording method of the account.

4.3. Enterprises shall be opened detailed accounting accounts according to levels in the following cases:

a) Accounting for production costs and calculating costs for each job; products, items, production and sales departments, etc.

b) Accounting for selling and determining business results for each job; products, items, production and sales departments, etc.

c) Accounting for inventory by item and type.

d) Accounting for capital sources, loans, receivables, payables, etc according to subject and type.

In addition, depending on the requirements for providing management accounting information, businesses design detailed accounting accounts accordingly.

5. Principles for organizing and applying accounting books

a) Enterprises shall base on the accounting book system issued by the Ministry of Finance or approved by the Ministry of Finance to apply for enterprises to supplement specific criteria and requirements to serve management accounting in enterprises, to supplement or design the content of accounting books.

b) Enterprises shall design new accounting books to suitable with the requirements of managing costs, revenues and determining business results by department, item, job and other requirements of management accounting (product cost calculation sheet; production report; sales detail book by customer, etc as sample book in the attached appendix).

6. Requirements and content of management accounting reports

6.1. Requirements for establishing management accounting reports system

a) The management accounting reporting system shall need to be built in accordance with the information provision requirements for internal management of each specific enterprise.

b) The content of the management accounting reporting system shall need to ensure adequate provision and comparability of information to serve the management, administration and economic decision-making requirements of the enterprise.

c) Targets in management accounting reports shall need to be designed in accordance with the targets of plans, estimates and financial reports but shall be changed according to management requirements at all levels.

​6.2. The system of management accounting reports

6.2.1 The system of main management accounting reports of the enterprise shall include:

a) Reports on the situation of the implementation:

- Reports of revenues, costs and profits of each type of product, goods and service;

- Report of the volume of goods purchased and sold during the period according to customers, selling prices, discounts and other forms of promotion;

- Detailed reports on the volume of products (services) completed and consumed;

- Report on compliance with inventory norms;

- Report on labor usage and labor productivity;

- Detailed reports on products and completed work;

- Report on the balance of import, export, and inventory of raw materials, materials, products, and goods;

- Detailed report on receivables by debt term, debtor and debt collection ability;

- Detailed reports on loan debts and payables by debt term and creditor;

- Report of the department to the responsibility center;

- Detailed report on increase and decrease in equity.

b) Analysis report:

- Analyzing the relationship between costs, volumes and profits;

- Analyzing the financial situation of the enterprise;

- Analyzing factors affecting the implementation of production and financial plans;

In addition, based on the management and operating requirements of each specific period, enterprises shall prepare other management accounting reports.

6.2.2 Some major management accounting report samples: specified in the attached appendix.

7. The storage of management accounting documents

The storage of management accounting documents, especially general management accounting reports, analysis of business results, business strategies, etc shall be implemented according to the decision of the legal representative of the accounting unit on the basis of applying the provisions of law on storing accounting documents.

PART III

THE KEY CONTENTS OF MANAGEMENT ACCOUNTING

1. Management accounting for cost and product prices

1.1. Management accounting for cost

Enterprises shall base on operational characteristics and management requirements to organize to collect costs according to each center generating costs, such as: group, team, workshop or for each job, each product, each production step or for the entire production process and determining the types of costs of the enterprise according to the following contents:

1.1.1 Classification of costs

The classification of an enterprise's costs shall be aimed at serving the management of the enterprise's production and business activities, so it shall depend on the purpose and management requirements of the enterprise in each period and each situation to choose appropriate classification criteria.

a) Serving financial accounting, production and business costs shall be classified according to the following criteria:

- According to the content of economy, costs shall be divided into two types:

+ Production costs: are costs that form the value of manufactured products, including: raw material costs, direct materials, direct labor costs, general production costs;

+ Non-production costs: are costs that do not increase the value of manufactured products but are necessary to complete the production and business process, including: sales costs, business management costs.

- According to the relationship between costs and items on the financial statements, costs shall be divided into:

+ Period costs: are costs incurred in a business period (over time) that can be related to many different objects and products. Period costs are characterized by costs that reduce profits in the business period in which the cost arises;

+ Product costs: are the cost that constitutes the value of completed product units, in stock or sold.

b) Serving management accounting, production and business costs shall be classified according to the following criteria:

- According to the relationship to planning and control, costs shall be divided into:

+ Variable costs;

+ Fixed costs;

+ Mixed costs: the type of cost that includes both variable and fixed elements (for example: telephone costs, repair costs, maintenance of fixed assets, etc).

- According to cost nature, costs shall be divided into:

+ Direct costs: is the cost of product composition, associated with a certain completed product or service (for example: cost of raw materials, direct materials; direct labor costs, etc.);

+ Indirect costs are costs related to many different products or services that do not increase the value of the product or service (for example: administrative management costs, costs of management staff salary, etc). Indirect costs must be allocated to each unit, product, and job;

+ Controllable costs are costs that the management level predicts will arise and be under the decision of that management level;

+ Uncontrollable costs are costs whose occurrence cannot be predicted by the management level and are not within the decision-making authority of that management level.

c) According to the requirement to use costs in selecting investment projects, costs of a project shall be classified as follows:

- Appropriate costs;

- Cost differences;

- Opportunity costs;

- Sunk costs.

1.1.2 Cost pooling method

Enterprises shall need to choose appropriate cost pooling methods for each type of cost:

a) Direct method: is applicable to cases where costs are incurred only related to one cost object. According to this method, the cost of any object are collected directly for that object.

b) Allocation method: is applicable to cases where costs arise related to many cost subjects. When implementing the cost allocation method, enterprises can choose one of the following allocation bases: work hours, work days, machine operating hours, usable area, etc and the allocation method is direct or distributed by level.

1.1.3 Determining cost centers

Determining cost centers shall depend on the production process and scale of each enterprise. Cost centers shall be typically classified as:

- Main centers, such as: purchasing centers, production centers (factories, production departments);

- Sub-centers, such as: administrative and management centers, accounting and finance centers, etc.

1.2. Management accounting of product cost

1.2.1 Methods of price calculation

Depending on the characteristics of the product or the relationship between the cost accounting object and the product cost object, businesses shall choose one method or a combination of multiple methods to calculate product cost.

The main calculation methods of cost shall be:

a) The method of price calculation based on work and product

Calculating price by job (or product) shall be the process of gathering and allocating costs of raw material, direct materials, direct labor costs and manufacturing overhead costs related to a job, a individual product or a specific product group, an order:

+ Costs of raw materials, direct materials, direct labor costs shall be gathered directly for each separate job and product;

+ General production costs: When general production costs shall arise, they shall be gathered together for jobs and products and then allocated.

To apply this method, enterprises shall base on the specific situation to choose one of the methods of allocating general production costs, as follows:

+ Allocating general production costs according to actual levels;

According to this method, the enterprise will adjust the difference between the estimated allocation and the actual general costs incurred to record an increase or decrease in "cost of sold goods" during the period (If the difference shall be slight and insignificant) or the difference shall be allocated to costs of production, unfinished business, finished products and cost of goods sold on a proportional basis to the balance (or accumulated amount) of these accounts before allocating the difference general production costs.

+ Estimating the general production costs of each job, product, etc right from the beginning of the period, and at the end of the period adjust of the difference between the actual costs incurred and the estimated general production costs.

b/ Method of price calculation by production process (cost summing method);

c/ Method of price calculation by norms;

d/ Coefficient methods;

dd) Cost exclusion method by the sub-products.

1.2.2. Subjects and period of price calculation

a) Subjects of price calculation shall be finished product details, finished products, group of finished products, particular works or prices of divisions of fields. Enterprises shall base on one or a number of the following bases for determining the appropriate subjects of price calculation

+ The characteristics of the organization of production and management

+ The characteristics of the production technology process;

+ The conditions and level of accounting and management requirements of enterprises.

b) The period of price calculation shall usually make by months, quarters or years. Enterprises shall base on the form, process and characteristics of production to determine the period of price calculation. The period of price calculation of single products shall be the time that the single product shall be finished.

1.2.3. The order of accounting for production costs and calculating product prices shall follow the following steps:

+ Gathering costs (direct, indirect and allotted);

+ Summing up costs, settling differences of deficit/surplus;

+ Inventorying, assessing incomplete products, identifying incomplete costs;

+ Determining the method of price calculation be applied;

+ Making reports on product prices.

2. Administration accounting of selling and business results

2.1. Determining selling prices of products

a) Enterprises shall determine selling prices of products on the principle: the price shall sufficiently cover the cost and reach expected profits.

b) Enterprises shall base on circumstances, conditions and each type of selling prices (the selling price of common product, new product, internal selling prices, competitive selling price…) to select the basis for determining the appropriate selling price (e.g. basing on the production cost, the variable cost in the total cost of products, the material and labor costs, etc.)

Example: Determining the selling price based on the production cost according to the method of adding the increasing rate into cost by the formula:

Selling price = Production cost of the product x (1 + % added)

Expected payback level = Investment payback rate x Total investment capital

2.2. Administration accounting of selling and selling results

a) Enterprises shall organize accounting of sales according to each method of sales and payment (immediate cash sales, installment sales, sales through barter agents), by each division of sales (area 1, area 2…), by each group of products and primary type of activities. Enterprises shall also organize accounting of sales by combining multiple criteria depending on the management requirement and particular conditions and circumstances of the enterprise in each period.

b) Enterprises shall need to build the models of accounts, accounting books, reports of selling and selling results continually and flexibly in order to practice accounting in appropriate with selling cases in each period, satisfying the requirements for determining the enterprise production and business result.

3. Analyzing the relation between costs, volume and profits

The relation between costs, volume and profits shall be the relation between factors such as selling prices, volume (quantity and operation level), cost structure of sold goods (fixed and variable) and the impact of these factors on enterprises’ profits

Enterprises shall need to analyze this relation via the system of analyzing criteria including:

+ Interest calculated on variable costs of units (as known as Contribution margin);

+ Total interest calculated on variable costs;

+ Interest rate calculated on variable costs;

+ Cost structure;

+ Economic lever;

+ Breakeven point (output, revenue, capacity, breakeven time, etc.);

The analysis of this relation shall help enterprises to make decisions in production and business in order to maximize profits such as: selecting products and output, selling prices, cost norms.

4. Selecting appropriate information for making decisions

Making decisions shall be the basic function of enterprise administrators. The popular enterprise decisions shall include: short-term decisions and long-term decisions.

4.1. Appropriate information for making short-term decisions

Selecting appropriate information for making short-term decisions, management accounting shall need to take the following steps:

+ Collecting information (costs, revenues) relating to the business plan that shall need decisions;

+ Discarding the inappropriate information being sunk costs, similar costs both quantity and nature) and equivalent revenues of the plans being considered;

+ Identifying the appropriate information;

+ Making decisions.

4.2. Appropriate information for making on long-term investment decisions

Long-term investment decisions shall be: decisions on investing in new assets or continuing to use old assets; expanding production scale, renting or purchasing fixed assets; selecting other equipment in appropriate time, etc.

Providing information for leaders to make investment decisions, the management accounting shall need to implement the following works:

- Classifying decisions as:

+ Selective decisions;

+ Prioritized decisions.

- Collecting and classifying information consistently with the type of decisions.

- Selecting one of the appropriate methods to identify information (making investment projects) in appropriate with the type of decisions:

+ The payback period method;

+ The method of net present value;

+ The method of profit arising rate adjusted by time;

+ The method of profitability index adjusted by time;

- Deciding to select a plan after obtaining appropriate information.

5. Making budget estimates for production and business

5.1. Requirements for making budget estimates for production and business

a) The criteria system for estimating budget for production and business shall be built separately for each process such as process of purchase, process of production, product consumption process of the enterprise's production and business activities, and detailed for each content including: monetary capital, inventory; each kind of cost of business operation such as selling cost, enterprise management cost; each kind of summary report: the statement of financial position, the business result report, etc.

b) The budget estimates for production and business shall be make for the whole year and divided into quarters and months. However, for the accuracy and feasibility of the estimate, enterprises shall make the estimate on the basic of the situation of estimating the implementation at the end of the months and quarters and the influencing factors of the succeeding months and quarters.

However, in the process of building each estimate criterion, enterprises shall need to associate it with other estimate criteria to form a system of estimate criteria.

The system of estimated criteria shall include:

- Estimated criteria of consumption of products, goods and services;

- Estimated criteria of production output of products and services;

- Estimated criteria of production and service costs;

- Estimated criteria of inventories;

- Estimated criteria of selling costs;

- Estimated criteria of enterprise management costs;

- Estimated criteria of monetary capital;

- Estimated criteria of the production and business results report;

- Estimated norms of the statement of financial position.

5.2. The order of making budget estimates for production and business

a) Divisions in the enterprise shall be directly responsible for making their own budget estimates for production and business.

b) The corporate accounting department shall be responsible to sum up the estimates from divisions to create the general budget estimates of the entire enterprise, and to organize meetings with relevant divisions to collect amending, supplementing opinions and complete the estimate.

c) Submitting to the enterprise’s leaders. After receiving opinions from the enterprise’s leaders, these opinions shall be disseminated to all departments within the enterprise for implementation.

6. The management accounting of some other items

6.1. The management accounting of fixed assets

a) Enterprises shall need to open and sum up the detailed accounting books to reflect the criteria of item values during the process of management, use and to analysis, assessment of the efficient use of fixed asset of the entire unit, divisions and subjects of primary fixed asset; and provide demand of use of fixed assets of each division as well as the entire enterprises particularly in order to assist enterprise’s leaders basing on the decision on options of exploiting existing fixed asset capacity, and new appropriate, efficient investment.

b) Enterprises shall determine the structure of the fixed asset by the classification of appropriate fixed asset together with practice of accounting each subject of fixed assets in order to satisfy the requirements of providing information for making long-term investment plans of each period, analyzing the efficiency of fixed asset use as well as loss due to fixed assets use be not right purpose.

c) Enterprises shall need to determine the specific scope of management accounting organization to build an appropriate account model, fixed asset accounting books or use financial accounting documents for analysis.

6.2. Administration accounting of inventory

a) Enterprises shall need to make the list of supplies and organize management accounting on the existing, used, and sold numbers in both quantity and value in accordance with the list of supplies, products, and goods established as requirement of internal business management needs.

b) To properly account for the amount of used materials and inventory, the enterprise shall need to determine the method for calculating inventory prices that is appropriate to the specific conditions and circumstances of the enterprise, meeting management requirements as well as planning for the future.

c) Enterprises shall make raw material cost norms for each job and product and set reserve norms for each inventory point.

d) Comparing the established norms and the reality, making comment and proposal.

6.3. Administration accounting of labor and salaries

a) Enterprises shall be implemented the following works:

- Establishing labor hour norms and unit prices of salary for workers and employees of the enterprise;

- Establishing norms for labor costs consumed for each stage of work, product, service, etc.

- Determining and controlling the working time of each employee;

- Calculating fully and allotting labor costs to charges, cost centers and prices reasonably, appropriately.

b) Methods of implementation:

- Enterprises shall need to design and operate well the system of timekeeping, salary calculation and salary payment table in accordance with cost centers and prices.

- Applying appropriate labor cost accounting methods (for each time and condition):

+ Direct method;

+ Allocation method: this method shall apply in cases where employees participate in many jobs at the same time and the enterprise shall need to choose an appropriate allocation basis.

6.4. Administration accounting of debts

a) The requirement of management accounting for debts shall be to ensure the provision of information about: creditors, debt types by term, payment term and debt quality at any time when managers need it;

b) Based on the actual situation of the enterprise, design accounts to reflect debts by creditor, debtor and analyze debt quality and payment term or reflect debts by debt term, and analyze by creditor and quality of debt.

Part IV

ORGANIZATION OF MANAGEMENT ACCOUNTING SYSTEM AND PERSON DOING MANAGEMENT ACCOUNTING

1. The organization of management accounting system

1.1. The organization of management accounting system of the enterprise shall be consistent with the operation characteristic, investment scale, production and business location of the enterprise, with the level of economic and financial management decentralization of the enterprise. The accounting machine shall be compact, scientific and highly efficient in providing information for the leadership system of the enterprise.

1.2. Enterprises shall base on their particular conditions (scale, qualifications of officers, characteristic of production, business, management, technical facilities, etc.) to organize the management accounting system under one of the following forms:

a) Combined form: Organization of the combination of financial accounting with management accounting according to each accounting section: Production cost accounting and price calculation, sales accounting, etc. Accountants who shall monitor any accounting activity will perform both financial accounting and management accounting for that activity. In addition, the enterprise shall arrange people to carry out other general management accounting contents, such as: collecting and analyzing information to serve making the estimate and analyzing information to serve decision-making in the corporate governance. These contents may assign general accountants or the chief accountant.

b) Separate form: organizing into a separate management accounting department from the financial accounting department in the enterprise's accounting department. This form shall be only suitable for large-scale businesses, such as corporations, economic groups, etc.

c) Mixed form: shall be a form that combines the two forms mentioned above such as: organizing a separate cost management accounting department, while other contents follow the combined form.

2. The person doing management accounting

2.1. Enterprises shall need to arrange person having sufficient capacity and qualification to do management accounting on the basis of applying standards and conditions for accountants prescribed in the Law on Accounting.

In case the enterprise organizes the management accounting division separately from the financial accounting division, the person doing management accounting shall satisfy standards and have rights and responsibilities as follows:

a) Standards of the person doing management accounting:

+ Having professional accounting ethics, honesty, integrity, and a sense of compliance with the law;

+ Having professional qualifications and experience in accounting.

b) Powers of the person doing management accounting:

The person doing management accounting shall have independence in expertise, accounting operations, or statistics; have the right to proactively analyze, evaluate and make recommendations.

c) Responsibilities of the person doing management accounting:

The person doing management accounting shall be responsible for complying with legal regulations on accounting, performing assigned tasks and taking responsibility for their expertise and operations as required by leaders of the enterprise. When changing the person doing management accounting, the old person doing management accounting shall be responsible for handing over accounting work and accounting documents to the new person doing management accounting. The old person doing management accounting shall be responsible for accounting work during their time as management accounting.

2.2. Hiring as a management accounting

For accounting units that shall not have the conditions or arrange people to work as the person doing management accounting, these accounting units can hire people to work as the person doing management accounting according to the following instructions:

- The accounting unit shall sign a contract with an accounting service enterprise or an individual registered to do accounting services to hire the management accounting according to the provisions of law;

- Hiring the management accounting shall be made into a contract according to the provisions of law;

- The accounting unit shall hire the management accounting that shall be responsible for providing fully, promptly, and truthfully all information and documents related to the accounting work and paying fully and promptly accounting service fees as agreed in the contract;

- Enterprises, individuals providing management accounting services shall be responsible for accounting information and data as agreed in the contract.

3. The chief accountant of the enterprise shall be responsible for organizing the implementation of management accounting in the enterprise and shall be responsible to the leadership of the enterprise for the information and data of management accounting provided.

Part V

IMPLEMENTATION PROVISIONS

1. This Circular takes effect 15 days after its publication in the Official Gazette.

2. Enterprises shall base on the guidance in this Circular as a basis for building and organizing appropriate and effective management accounting at enterprises and member enterprises (for Corporations), and affiliated and dependent units (for the Company).

3. Universities, Academies, Colleges, and High Schools of Economics - Finance - Accounting shall develop course books of appropriate management accounting based on the content of this Circular.