Circular 70/2019/TT-BTC guiding the commune budget and financial accounting regime

CIRCULAR

Guiding the commune budget and financial accounting regime

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

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

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, on detailing a number of articles of the Law on the State Budget;

Pursuant to the Government’s Decree dated July 26, 2017, defining the functions, tasks, powers and organizational structure of the Ministry of Finance;

At the request of the Director General of Department of Accounting and Auditing Regulations;

The Minister of Finance promulgates the Circular on guiding the commune budget and financial accounting regime.

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulations

This Circular guides on lists, forms and methods of making accounting documents; list of book-keeping account systems and method of accounting book-keeping accounts; list of accounting book forms and methods of making accounting books; list of forms, methods of making and presenting financial statements of units subjected to Article 2 of this Circular.

Article 2. Subjects of application

This Circular applies to People's Committees of communes, wards and towns (hereinafter referred to as communes) in districts, towns and cities (hereinafter referred to as districts) of provinces and centrally run cities (hereinafter referred to as provinces) nationwide and other organizations and individuals involved in the communes’ budget and financial accounting work.

Chapter II

SPECIFIC PROVISIONS

 Article 3. Regulations on accounting documents

1. Accounting documents mean papers and information-carrying articles reflecting economic and financial operations that have arisen and completed, serving as a basis for making entries in accounting books.

2. Communes shall uniformly use the forms of accounting documents as specified in this Circular.

- For compulsory documents (denoted as BB) during the implementation process, communes may not modify the prescribed document form.

- For guiding documents (denoted as HD) during the implementation process, communes are allowed to amend and supplement the forms of documents in accordance with arising economic and financial operations.

3. For pre-printed document forms, they must be carefully preserved, prevented from destruction or rotting. Checks, Receipts and valuable papers must be managed similarly to money.

4. Lists, forms and explanation of methods for preparing accounting documents are specified in Appendix No. 01 "Accounting document system" enclosed with this Circular. For economic transactions arising without accounting documents specified in Appendix 01, communes shall prepare accounting documents to ensure that at least 7 contents specified in Article 16 of the Law on Accounting are met.

Article 4. Regulations on book-keeping accounts

1. Book-keeping accounts reflect regularly, continuously and systematically on the situation of assets, receipt and use of funds allocated by the state budget and other sources of funding; situation of revenues, operating expenditures, operating results and other items in communes.

2. Classification of book-keeping account:

a) The accounts on balance sheet include accounts from type 1 to type 9, which are double-entry accounted (reciprocal entries between accounts). The book-keeping account system in the classification and systematization table of economic and financial operations according to economic content, includes 26 level 1 accounts, of which some level 1 accounts are detailed according to level 2 accounts in accordance with management requirements.

b) Accounts off balance sheet are single-entry accounted for (no reciprocal entries between accounts). The accounts off balance sheet include 02 accounts: Account 005- Durable tools in use and Account 008- Budget expenditure estimate. Account 008 related to the state budget is reflected according to the table of contents of the state budget and according to the budget year (previous year, this year).

3. Use of account system:

a) Communes shall rely on the book-keeping account system promulgated in this Circular to apply book-keeping accounts suitable to the communes’ operations.

b) Communes may replenish book-keeping accounts in the following cases:

- Supplementing detailed accounts for accounts specified in the list of book-keeping account systems (Appendix No. 02) enclosed with this Circular to serve the management requirements of the commune.

- The Ministry of Finance shall approve in writing the supplementation of the accounts at the same level with the accounts specified in the list of book-keeping account systems (Appendix No. 02) enclosed with this Circular.

4. List of book-keeping account systems, explanation of contents, structure and methods of recording book-keeping accounts of communes specified in Appendix No. 02 "Book-keeping account system" enclosed with this Circular.

Article 5. Regulations on accounting books

1. Communes must open accounting books to record, systematize and keep all arising economic and financial operations of the commune. The preservation and archiving of accounting books shall comply with the provisions of the law on accounting, relevant documents and regulations in this Circular.

2. Communes must monitor their revenues and expenditure tasks according to the state budget index and regulations on finance, budgets serving the purpose of preparing settlement reports with the state budget and competent agencies.

3. Types of accounting books

a) Communes use only one system of accounting books for one annual accounting period, including general and detailed accounting books. General accounting books and detailed accounting books must be fully opened and fully and strictly implemented in accordance with the contents, order and recording methods for each accounting book form.

b) Form of general accounting books:

- The Journal - Ledger is applied to communes that implement accounting in the form of a Journal - Ledger. It is used to record all economic and financial operations as they arise in chronological order and systematize them according to their economic content in the book-keeping accounts, the data in the Journal - Ledger provides a comprehensive chronological summary of the situation of assets, budget and use of budget.

- The Ledger compiles and systematizes economic and financial operations based on their economic content within the accounting accounts. The figures in the Ledger provide a comprehensive summary of the situation of assets, budget and use of budget.

c) Form of detailed accounting books and cards:

Detailed accounting books and cards are used to record accrual economic and financial operations relating to accounting subjects at the management requirements that general ledger has not reflected them specifically, the figures in the detailed accounting books provide specific information to assist with management at the commune level and with the calculation and establishment of indicators in financial statements and state budget final accounts.

According to requirements for management and accounting of each specific accounting subject, communes are allowed to further detail the indicators in the detailed accounting books and cards to serve the making of financial reports and final accounts according to management requirements.

4. Responsibilities of persons keeping and recording accounting books

a) Accounting books must be managed strictly, with clearly defined responsibilities assigned to the individual in charge of keeping and recording them. The assigned personnel in charge of keeping and recording accounting books must take responsibility whilst he/she keeps and records the accounting book.

b) When the personnel who is keeping and recording the accounting book is replaced, the commune’s chief accountant must organize the transfer of management and recording responsibilities between the former and new accounting staff. The former accountant must take responsibility for the period over which he/she kept and recorded the accounting book, and the new accountant must take responsibility from the date of handover. The handover minutes must be certified by the commune’s chief accountant.

c) The personnel responsible for keeping and recording the accounting books must promptly record transactions after they occur, ensure that the entries are clear, complete, and follow the prescribed accounting book form. Information and figures recorded in the accounting book must be accurate, truthful, and conformable with respective accounting documents.

d) Accounting entries must be recorded in the chronological order of economic and financial operations. The information and figures in the accounting book of the subsequent year must succeed those in the preceding year to ensure the continuity from the opening to closing of the book.

5. Opening accounting books

a) Rules for opening accounting books

The accounting books must be opened at the beginning of the accounting year or immediately after the decision to establish and commence the commune's activities. The accounting books are opened at the beginning of the new fiscal year or budget year to transfer balances from the previous year's accounting books and record new economic and financial operations arising in the new year from January 01 of the new fiscal year or budget year.

The revenue and expenditure figures of the commune's budget from the previous year that arise during the adjustment of the settlement are recorded in the commune's budget revenue and expenditure accounting books during the adjustment period, tracking the revenue, expenditure, and discrepancies between revenue and expenditure of the commune's budget during the adjustment period to facilitate the preparation of the state budget final accounts as required. If economic operations occur within the current year, they shall be recorded in the current year's accounting books.

b) In case of making entries on paper (manual), communes must complete the legal procedures for accounting books as follows:

- For accounting books in bound book form:

+ Cover (left corner) must bear the commune’s name, cover’s middle must bear book’s name, dates of opening and closing book, full name and signature of the person opening the book, signatures and seals of the personnel in charge of accounting and Chairperson of the Commune-level People’s Committee; dates of closing or transferring book.

+ Pages of the accounting book must be numbered from 1 to the last page, any two pages must bear the affixed seal of the commune.

- For accounting books in separate sheet form:

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

+ Separate-sheet book must bear the signature and seal of the Chairperson of the Commune-level People’s Committee and be registered before being used.

+ Separate-sheet book must be arranged in the account order and kept safe and easily looked up.

c) In case of opening electronic accounting books:

The electronic accounting books must contain elements of accounting books in accordance with the law on accounting. If the accounting books are kept in the electronic device, the Chairperson of the Commune-level People’s Committee must take responsibility for ensuring the safety and security of data information and must ensure that the data can be retrieved within the storage period. Regarding the general accounting book, it must be printed on paper, bound into a book, and all procedures specified at Point b, Clause 5 of this Article must be completed.

6. Recording accounting books

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

b) The recording must be carried out in accordance with the prescribed sequence and accounting book forms specified in Appendix No. 03 "Accounting Books System" enclosed with this Circular. When a page is filled, the total number of lines on each page must be added to carry forward the total from the previous page to the beginning of the next page, no additional entries should be recorded above or below.

c) In the case of recording an accounting book on paper, non-fading ink must be used, red ink should not be used for recording accounting entries. If a page is not fully written, blank section must be crossed out; no erasures or no chemicals intended for correction are allowed.

7. Closing accounting books

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

a) Time for closing

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

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

- The communes must close the accounting book at the end of the fiscal year before the financial statement is made. Besides, the communes must close the accounting book in cases of sudden inventory checks or other circumstances as stipulated by law.

b) Procedures for closing accounting books

(1) In case of making entries on paper (manual)

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

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

- Based on the detailed accounting books and cards, compile a detailed summary table for accounts that need to be recorded across multiple books or multiple book pages.

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

Step 2: Closing book

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

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

“Closing balance” is calculated as follows:

After calculating the balance of each account, record any accounts with debit balances in the "Debit" column and accounts with credit balances in the "Credit" column.

- Keep writing “Total cumulative amount from the beginning of the year”;

- Draw two straight lines to end the closing.

- If a detailed accounting book contains accrual Debit column, accrual Credit column, and a “Balance” column (or receipt, discharge, “balance” or revenue, expense, “closing balance”, etc.), the figures in the balance column (closing or not) shall be written in the line “Closing balance” off the “Balance” column.

After closing the accounting book, the bookkeeper must sign under the 2 lines, and then the person in charge of accounting will countersign after checking for accuracy and balance. And then refer it to the Chairperson of the Commune-level People’s Committee for inspection and approval for the legal status of figures.

(2) For computerized bookkeeping:

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

8. The list of accounting books, forms, and methods of making accounting books are specified in Appendix 03 “Accounting books system” enclosed with this Circular.

Article 6. Budgetary statements

1. Budgetary statements are intended for aggregating revenue and expenditure of commune budget, presented according to State budget entries to provide them to the commune-level People's Council, report to the district-level financial office, and other competent authorities.

2. Communes prepare the budgetary statements in accordance with the regulations specified in Circular No. 344/2016/TT-BTC dated December 30, 2016 of the Ministry of Finance, regulates the management of commune budgets and other financial activities of communes, wards, and towns, as well as documents that amend and supplement Circular No. 344/2016/TT-BTC.

Article 7. Financial statements

1. The financial statements are intended for providing information about the financial situation, historical financial performance and cash flow of the communes. At the end of the accounting year, communes must close their books and prepare financial statements.

Financial statements of the commune are the basic information for compiling the state financial statement for the district.

2. Rules and requirements for making financial statement

a) Rules:

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

The financial statement must bear the signatures of the person prepared, personnel in charge of the commune accounting, and Chairperson of the Commune-level People’s Committee. The signatories of the financial statement must take responsibility for its contents.

b) Requirements:

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

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

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

3. Reporting period

The financial statement must be made at the end of the fiscal year as prescribed in the Law on Accounting.

4. Responsibilities of communes in making financial statements

Communes must make annual financial statements in forms regulated at Appendix 04 enclosed to this Circular.

5. Recipient and deadline for submitting financial statement

a) Recipient:

Communes submit financial reports to the district-level State Treasury where the commune conducts transactions, the Commune-level People's Council, the district-level finance office, and other competent State agencies as prescribed by law.

b) Deadline for submitting financial statement:

Communes must submit their annual financial statements to the competent authority within 90 days, from the closure of the fiscal year as prescribed by the accounting law.

6. Publishing financial statement

The financial statement shall be published as prescribed in the law on accounting and relevant documents.

7. The list of reports, forms, explanations of financial statement preparation methods is prescribed in Appendix 04 “Financial statement system” issued herewith.

Chapter III

IMPLEMENTATION ORGANIZATION

Article 8. Effect

1. This Circular takes effect from January 01, 2020.

2. This Circular supersedes Decision No. 94/2005/QD-BTC dated December 12, 2005 of the Ministry of Finance on commune budget and financial accounting regime and Circular No. 146/2011/TT-BTC dated October 26, 2011 of the Ministry of Finance guidelines for amending and supplementing commune budget and financial accounting regime issued together with Decision No. 94/2005/QD-BTC dated December 12, 2005

Article 9. Organization of implementation

1. The Chairperson of the People's Committee of the commune, ward, or town must strictly organize the implementation of the regulations in this Circular.

2. Director of the Department of Audit and Accounting Regulations, Director of State Budget, General Director of State Treasury, the Chief of the Ministry Office and heads of relevant units affiliated to the Ministry of Finance shall instruct, inspect and implement this Circular./.

* All Appendices are not translated herein.