Law on Accounting No. 03/2003/QH11

LAW

Finance Department,

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To unify accounting management, ensure that accounting serves as a tool for strict, effective supervision and management of all economic and financial activities, providing complete, truthful, timely, transparent, and public information to meet the organizational, managerial, and operational requirements of state agencies, enterprises, organizations, and individuals.

Pursuant to the Constitution of the Socialist Republic of Vietnam in 1992, as amended and supplemented by Resolution No. 51/2001/QH10 dated December 25, 2001 of the Tenth National Assembly, tenth session;

This Law stipulates on accounting.

Chapter 1:

GENERAL PROVISIONS

Article 1. Scope of Regulation

This Law stipulates on the content of accounting work, accounting organization structure, accountants, and accounting professional activities.

Article 2. Applicability

1. The objects subject to this Law include:

a) State agencies, public service units, organizations using state budget funds;

b) Public service units, organizations not using state budget funds;

c) Enterprises belonging to various economic sectors established and operating under Vietnamese law; branches, representative offices of foreign enterprises operating in Vietnam;

d) Cooperatives;

d) Individual business households, cooperative groups;

e) Accountants and other persons related to accounting.

2. For representative offices of foreign enterprises operating in Vietnam, individual business households, and cooperative groups, the Government shall specify the content of accounting work according to the basic principles of this Law.

Article 3. Application of International Treaties

In cases where international treaties to which the Socialist Republic of Vietnam is a party provide different provisions on accounting than those provided for in this Law, the provisions of such international treaties shall apply.

Article 4. Definitions

In this Law, the following terms shall be understood as follows:

1. Accounting is the process of collecting, processing, checking, analyzing, and providing economic and financial information in the form of value, physical assets, and labor time.

2. Financial accounting is the process of collecting, processing, checking, analyzing, and providing economic and financial information through financial reports for users requiring such information from accounting entities.

3. Management accounting is the process of collecting, processing, analyzing, and providing economic and financial information based on management requirements and economic and financial decisions within accounting entities.

4. Economic and financial transactions are specific activities that increase or decrease assets and sources of asset formation of accounting entities.

5. An accounting entity is an object specified in points a, b, c, d, and đ of Clause 1, Article 2 of this Law that prepares financial statements.

6. An accounting period is a defined timeframe from when an accounting entity starts recording in accounting books until the end of the recording period, closing the books to prepare financial statements.

7. Accounting vouchers are documents and items carrying information reflecting completed economic and financial transactions, serving as the basis for recording in accounting books.

8. Accounting documents are accounting vouchers, accounting books, financial statements, management accounting reports, audit reports, accounting inspection reports, and other materials related to accounting.

9. Accounting regulations are rules and guidelines on accounting in a particular field or specific tasks issued by state management agencies on accounting or organizations authorized by such agencies.

10. Accounting inspection is the examination and evaluation of compliance with accounting laws, the truthfulness, and accuracy of accounting information and figures.

11. Practicing accounting is the provision of accounting services by enterprises or individuals meeting the criteria and conditions for providing such services.

12. Accounting formats are templates for accounting books, procedures, methods of recording entries, and relationships between accounting books.

13. Accounting methods are specific ways and procedures for implementing each accounting task.

Article 5. Accounting Tasks

1. Collecting, processing accounting information and data according to the objects and contents of accounting work, in accordance with accounting standards and regulations.

2. Monitoring financial revenues and expenditures, obligations for collection, payment, and debt settlement; inspecting management and use of assets and sources of asset formation; detecting and preventing violations of financial and accounting laws.

3. Analyzing accounting information and data; advising and proposing solutions to serve management requirements and economic and financial decisions of the accounting entity.

4. Providing accounting information and data in accordance with the provisions of the law.

Article 6. Accounting Requirements

1. Fully reflecting economic and financial transactions occurring into accounting vouchers, ledgers, and financial reports.

2. Timely reflecting accounting information and data within the prescribed time frame.

3. Clearly, easily understandable, and accurately reflecting accounting information and data.

4. Truthfully reflecting the current status, essence of events, content, and value of economic and financial transactions.

5. Accounting information and data must be continuously reflected from the occurrence until the end of economic and financial activities, from establishment until the cessation of operations of the accounting entity; accounting data for the current period must follow the accounting data of the previous period.

6. Classifying and arranging accounting information and data systematically and comparably in sequence.

Article 7. Accounting Principles

1. The value of assets is calculated based on cost, including purchase costs, loading, transportation, assembly, processing, and other directly related costs until the asset reaches its usable state. The accounting entity shall not adjust the recorded asset value in the ledger except where otherwise provided by law.

2. Accounting regulations and methods chosen must be consistently applied throughout the fiscal year; if there are changes in the chosen accounting regulations and methods, the accounting entity must explain them in the financial report.

3. The accounting entity must collect and objectively, fully, and accurately reflect economic and financial transactions that occur during the accounting period.

4. Information and data in the annual financial report of the accounting entity must be disclosed in accordance with Article 32 of this Law.

5. The accounting entity must use cautious methods to evaluate assets and allocate revenues and expenditures without distorting the economic and financial results of the entity.

6. State agencies, public institutions, and organizations using state budget funds, in addition to implementing the provisions of paragraphs 1, 2, 3, 4, and 5 of this Article, must also conduct accounting according to the state budget classification.

Article 8. Accounting Standards

1. Accounting standards include basic principles and methods for recording ledgers and preparing financial statements.

2. The Ministry of Finance establishes accounting standards based on international accounting standards and in accordance with the provisions of this Law.

Article 9. Accounting Objects

1. Accounting objects under state budget revenue and expenditure, administrative, and public service activities; activities of entities and organizations using state budget funds include:

a) Money, materials, and fixed assets;

b) Sources of funds and reserves;

c) Payments within and outside the accounting entity;

d) Revenue and expenditure and handling of revenue and expenditure discrepancies in activities;

đ) State budget revenue and expenditure and surplus;

e) State financial investment and credit;

g) State debts and debt resolution;

h) National assets;

i) Other assets related to the accounting entity.

2. Accounting objects under the activities of entities and organizations not using state budget funds include assets and sources of asset formation as specified in points a, b, c, d, and i of paragraph 1 of this Article.

3. Accounting objects under business activities include:

a) Fixed assets and current assets;

b) Accounts payable and equity;

c) Business revenues, operating expenses, other expenses, and income;

d) Taxes and payments to the state budget;

đ) Results and distribution of business activity results;

e) Other assets related to the accounting entity.

4. Accounting objects under banking, credit, insurance, securities, and financial investment activities, in addition to those specified in paragraph 3 of this Article, also include:

a) Financial investments and credits;

b) Payments within and outside the accounting entity;

c) Commitments, guarantees, and negotiable instruments.

Article 10. Financial accounting, management accounting, general ledger accounting, and detailed accounting

1. Accounting at an accounting entity includes financial accounting and management accounting.

2. When performing financial accounting and management accounting tasks, the accounting entity must carry out general ledger accounting and detailed accounting as follows:

a) General ledger accounting must collect, process, record, and provide comprehensive information about the economic and financial activities of the entity. General ledger accounting uses monetary units to reflect the asset situation, sources of asset formation, economic and financial activity situations and results of the accounting entity;

b) Detailed accounting must collect, process, record, and provide detailed information using monetary units, physical units, and labor time units for each specific accounting object within the accounting entity. Detailed accounting illustrates general ledger accounting. The figures from detailed accounting must match those from general ledger accounting for a given accounting period.

3. The Ministry of Finance shall guide the application of management accounting suitable for each field of operation.

Article 11. Units of measurement used in accounting

Units of measurement used in accounting include:

1. Monetary unit is the Vietnamese đồng (national symbol is "đ", international symbol is "VND"). In cases where economic and financial transactions involve foreign currency, they must be recorded in the original currency and in Vietnamese đồng according to the actual exchange rate or converted according to the exchange rate published by the State Bank of Vietnam at the time of occurrence, except when otherwise provided by law; for types of foreign currency without an exchange rate with the Vietnamese đồng, they must be converted through a type of foreign currency that has an exchange rate with the Vietnamese đồng.

An accounting entity primarily receiving and spending in foreign currency may choose a foreign currency specified by the Ministry of Finance as the monetary unit for accounting purposes, but when preparing financial statements for use in Vietnam, it must convert them into Vietnamese đồng according to the exchange rate published by the State Bank of Vietnam at the time of closing the books for the preparation of financial statements, except when otherwise provided by law.

2. Physical units and labor time units are the officially recognized units of measurement of the Socialist Republic of Vietnam; if other units of measurement are used, they must be converted into the officially recognized units of measurement of the Socialist Republic of Vietnam.

Article 12. Writing and numerals used in accounting

1. Writing used in accounting is Vietnamese. In cases where foreign language must be used on accounting vouchers, ledgers, and financial reports in Vietnam, both Vietnamese and the foreign language must be used simultaneously.

2. Numerals used in accounting are Arabic numerals: 0, 1, 2, 3, 4, 5, 6, 7, 8, 9; a period (.) must be placed after thousands, millions, billions, trillions, quadrillions, quintillions; when recording digits after the units place, a comma (,) must be placed after the units place.

Article 13. Accounting periods

1. Accounting periods include annual accounting periods, quarterly accounting periods, monthly accounting periods, and are defined as follows:

a) Annual accounting period is twelve months, starting from the first day of January 1st to the last day of December 31st of the Gregorian calendar year. An accounting entity with unique organizational and operational characteristics may choose an annual accounting period of twelve full months according to the Gregorian calendar year, starting from the first day of the first month of this quarter to the last day of the last month of the previous quarter of the following year, and notify the financial authority thereof;

b) Quarterly accounting period is three months, starting from the first day of the first month of the quarter to the last day of the last month of the quarter;

c) Monthly accounting period is one month, starting from the first day of the month to the last day of the month.

2. Accounting periods of newly established accounting entities are defined as follows:

a) The first accounting period of a newly established enterprise starts from the date of issuance of the Business Registration Certificate to the last day of the annual, quarterly, or monthly accounting period as stipulated in Clause 1 of this Article;

b) The first accounting period of other accounting entities starts from the effective date indicated on the establishment decision to the last day of the annual, quarterly, or monthly accounting period as stipulated in Clause 1 of this Article.

3. When an accounting entity splits, separates, merges, consolidates, changes ownership form, dissolves, ceases operations, or goes bankrupt, the final accounting period starts from the beginning of the annual, quarterly, or monthly accounting period as stipulated in Clause 1 of this Article to the last day before the effective date indicated on the decision to split, separate, merge, consolidate, change ownership form, dissolve, cease operations, or go bankrupt of the accounting entity.

4. In cases where the first or last annual accounting period is shorter than ninety days, it is permissible to add (+) to the next annual accounting period or add (+) to the previous annual accounting period to form one annual accounting period. The first or last annual accounting period must be shorter than fifteen months.

Article 14. Prohibited Acts

1. Forgery, false declaration, agreement, or coercion to make others engage in forgery, false declaration, or erasure of accounting records.

2. Intentionally providing, confirming false accounting information or figures through agreement or coercion.

3. Failing to record assets of the accounting entity or related assets in the accounting ledger.

4. Destroying or intentionally damaging accounting records before the retention period specified in Article 40 of this Law.

5. Issuing or announcing accounting standards or accounting regulations beyond authority.

6. Misusing position or power to threaten or oppress accountants in performing their accounting duties.

7. Persons responsible for managing and operating an accounting entity concurrently serving as accountants, warehouse keepers, cashiers, or buying and selling assets, except for private enterprises and individual business households.

8. Appointing accountants or chief accountants without meeting the qualifications and conditions stipulated in Articles 50 and 53 of this Law.

9. Other accounting acts prohibited by law.

Article 15. Value of Accounting Information and Figures

1. Accounting information and figures have legal value regarding the economic and financial situation of the accounting entity and are used for public disclosure as prescribed by law.

2. Accounting information and figures serve as the basis for establishing and reviewing plans, budgets, final accounts, examining, and handling violations of the law.

Article 16. Responsibilities for Managing, Using, and Providing Accounting Information and Records

1. The accounting entity is responsible for managing, using, preserving, and storing accounting records.

2. The accounting entity is responsible for timely, fully, truthfully, and transparently providing accounting information and records to organizations and individuals as prescribed by law.

Chapter 2:

CONTENT OF ACCOUNTING WORK

Section 1: ACCOUNTING DOCUMENTS

Article 17. Content of Accounting Documents

1. Accounting documents must contain the following main contents:

a) Name and number of the accounting document;

b) Date of issuance of the accounting document;

c) Name and address of the entity or individual issuing the accounting document;

d) Name and address of the entity or individual receiving the accounting document;

đ) Content of the economic and financial transaction;

e) Quantity, unit price, and amount of the economic and financial transaction recorded in figures; total amount of the accounting document used for receipt or payment recorded in figures and in words;

g) Signature, full name of the issuer, approver, and other relevant persons on the accounting document.

2. In addition to the main contents of accounting documents prescribed in Clause 1 of this Article, accounting documents may include additional contents according to each type of document.

Article 18. Electronic Documents

1. An electronic document is considered an accounting document when it contains the contents prescribed in Article 17 of this Law and is presented in electronic data form, encrypted without alteration during transmission over computer networks or on storage media such as magnetic tapes, floppy disks, and payment cards.

2. The Government shall provide detailed regulations on electronic documents.

Article 19. Preparation of Accounting Documents

1. All economic and financial transactions arising from the activities of the accounting entity must be documented with accounting documents. Each economic and financial transaction can only be documented once.

2. Accounting documents must be prepared clearly, completely, promptly, and accurately according to the prescribed format. In cases where there is no prescribed format for accounting documents, the accounting entity may prepare its own documents but must include all contents prescribed in Article 17 of this Law.

3. The content of economic and financial transactions on accounting documents cannot be abbreviated, erased, or altered; writing must be done with ink, numbers and letters must be continuous without interruption, blank spaces must be crossed out diagonally; accounting documents that have been erased or altered are not valid for payment and recording in the accounting ledger. When making a mistake on a model accounting document, it must be canceled by crossing out the incorrect document.

4. Accounting documents must be prepared with the required number of copies. If multiple copies of accounting documents need to be prepared for one economic and financial transaction, the contents of each copy must be identical. Accounting documents issued by the accounting entity for transactions with external organizations or individuals as prescribed in points a, b, c, and d of Clause 1 of Article 2 of this Law must bear the stamp of the accounting entity on the copy sent externally.

5. The preparer, approver, and other signatories on accounting documents are responsible for the content of the documents.

6. Accounting documents prepared in electronic form must comply with the provisions of Article 18 of this Law and Clauses 1 and 2 of this Article. Electronic documents must be printed on paper and stored as prescribed in Article 40 of this Law.

Article 20. Signing Accounting Documents

1. Accounting documents must have complete signatures. Signatures on accounting documents must be signed with ink. It is not allowed to sign accounting documents with red ink or stamp pre-carved signatures. The signature of one person on accounting documents must be consistent.

2. Signatures on accounting documents must be signed by authorized persons or those delegated authority. Strictly prohibited from signing accounting documents without recording all contents of the document that the signer is responsible for.

3. Payment accounting documents must be signed by the authorized person approving the payment and the head accountant or those delegated authority before implementation. Signatures on payment accounting documents must be signed individually for each copy.

4. Electronic accounting documents must have electronic signatures as prescribed by law.

Article 21. Sales Invoices

1. Organizations and individuals when selling goods or providing services must issue sales invoices to customers. In cases of retailing goods or providing services below the specified monetary amount where the buyer does not request an invoice, there is no need to issue a sales invoice. The Government shall specify specific cases of sales and monetary amounts of sales that do not require issuance of sales invoices.

2. Organizations and individuals when purchasing goods or receiving services have the right to request sellers or service providers to issue and deliver sales invoices to themselves.

3. Sales invoices can be presented in the following forms:

a) Pre-printed invoices;

b) Invoices printed from machines;

c) Electronic invoices;

d) Pre-printed price tags, tickets, or cards.

4. The Ministry of Finance shall prescribe the format of sales invoices, organize printing, issuance, and use of sales invoices. In cases where organizations or individuals print their own sales invoices, they must obtain written approval from the competent financial authority before implementation.

5. Organizations and individuals who sell goods or provide services without issuing or delivering sales invoices, or issue sales invoices not in accordance with Articles 19 and 20 of this Law and Paragraphs 1, 2, 3, and 4 of this Article shall be handled according to the provisions of the law.

Article 22. Management and Use of Accounting Documents

1. Information and figures on accounting documents serve as the basis for recording in accounting ledgers.

2. Accounting documents must be arranged according to economic content, chronological order, and stored safely as prescribed by law.

3. Only state agencies with competent authority have the right to temporarily detain, confiscate, or seal accounting documents. In cases of temporary detention or confiscation, the state agency with competent authority must photocopy the detained or confiscated accounting documents and sign confirmation on the copies; at the same time, establish a record detailing the reasons, quantities of each type of detained or confiscated accounting documents, and sign and stamp it.

4. Agencies sealing accounting documents must establish a record, detailing the reasons, quantities of each type of sealed accounting documents, and sign and stamp it.

Section 2: ACCOUNTS AND LEDGERS

Article 23. Accounting Accounts and Accounting Account System

1. Accounting accounts are used to classify and systematize economic and financial transactions according to economic content.

2. The accounting account system includes the necessary accounting accounts. Each accounting unit must use an accounting account system.

3. The Ministry of Finance shall specify detailed regulations on accounting accounts and the accounting account system.

Article 24. Selection of Accounting Account System

1. Accounting units must base on the accounting account system prescribed by the Ministry of Finance to select the accounting account system to apply at their unit.

2. Accounting units may detail the selected accounting accounts to serve the management requirements of their unit.

Article 25. Accounting Books and Accounting Book System

1. Accounting books are used for recording, organizing, and preserving all economic and financial transactions related to the accounting unit.

2. Accounting books must clearly record the name of the accounting unit; the name of the book; the date of establishment of the book; the date of closing the book; signatures of the person establishing the book, the chief accountant, and the legal representative of the accounting unit; page number; and stamping across the pages.

3. Accounting books must include the following main contents:

a) Date of entry in the book;

b) Number and date of the accounting vouchers serving as the basis for entry in the book;

c) Summary of the content of the economic and financial transactions occurred;

d) Amount of the economic and financial transactions entered into the accounting accounts;

đ) Opening balance, amount occurred during the period, closing balance.

4. Accounting books consist of general accounting books and detailed accounting books.

5. The Ministry of Finance shall specify the form of accounting, the accounting book system, and accounting books.

Article 26. Selection of Application of Accounting Book System

1. Each accounting unit shall have only one accounting book system for each fiscal year period.

2. Accounting units must base on the accounting book system prescribed by the Ministry of Finance to select an accounting book system to apply at their unit.

3. Accounting units may concretize the selected accounting books to serve the accounting requirements of their unit.

Article 27. Opening, Recording, and Closing of Accounting Books

1. Accounting books must be opened at the beginning of the fiscal year period; for newly established accounting units, accounting books must be opened from the date of establishment.

2. Accounting units must base on accounting vouchers to record in accounting books.

3. Accounting books must be recorded promptly, clearly, and fully according to the contents of the book. Information and figures recorded in accounting books must be accurate, truthful, and consistent with accounting vouchers.

4. Recording in accounting books must follow the chronological order of occurrence of economic and financial transactions. Information and figures recorded in the accounting books of the subsequent year must continue those of the preceding year. Accounting books must be recorded continuously from opening to closing.

5. Information and figures on accounting books must be recorded in ink; no additional entries should be made above or below; no overlapping entries; no skipping lines; if a page is not fully filled, it must be crossed out; when a page is fully filled, the total figures of the page must be summed up and transferred to the next page.

6. Accounting units must close accounting books at the end of the fiscal year period before preparing financial statements and other cases of closing accounting books as prescribed by law.

7. Accounting units may record accounting books manually or by computer. In case of recording accounting books by computer, they must comply with the provisions on accounting books under Articles 25 and 26 of this Law and Clauses 1, 2, 3, 4, and 6 of this Article. After closing accounting books on the computer, they must print the accounting books on paper and bind them separately for each fiscal year period.

Article 28. Repairing Accounting Books

1. When discovering errors in manually recorded accounting books, such errors shall not be erased to obliterate traces of information or figures, but must be corrected using one of the following three methods:

a) Corrective entry by drawing a straight line through the incorrect figure and writing the correct number or letter above it, with the signature of the chief accountant beside it;

b) Negative entry by recording the incorrect number in red ink or within parentheses, followed by the correct number, with the signature of the chief accountant beside it;

c) Supplementary entry by preparing a "supplementary bookkeeping voucher" and adding the difference to make up for the shortage.

2. In cases where errors are discovered in accounting books before the annual financial report is submitted to the competent state agency, corrections must be made directly on the accounting books of that year.

3. In cases where errors are discovered in accounting books after the annual financial report has been submitted to the competent state agency, corrections must be made directly on the accounting books of the year in which the error was found, and a note must be added at the end of the accounting book of that year.

4. Repairing accounting books when using computerized bookkeeping:

a) In cases where errors are discovered before the annual financial report is submitted to the competent state agency, corrections must be made directly on the accounting books of that year on the computer;

b) In cases where errors are discovered after the annual financial report has been submitted to the competent state agency, corrections must be made directly on the accounting books of the year in which the error was found on the computer, and a note must be added at the end of the accounting book of that year;

c) Repairing accounting books when using computerized bookkeeping is carried out according to the method prescribed in point b or point c of Clause 1 of this Article.

Section 3: FINANCIAL REPORTS

Article 29. Financial Reports

1. Financial reports are prepared in accordance with accounting standards and regulations to summarize and explain the economic and financial situation of the accounting entity.

2. The financial reports of accounting entities engaged in budget revenue and expenditure activities, administrative agencies, public institutions, organizations using state budget funds, and public institutions and organizations not using state budget funds include:

a) Balance sheet;

b) Revenue and expenditure report;

c) Notes to the financial statements;

d) Other reports as prescribed by law.

3. The financial reports of accounting entities engaged in business operations include:

a) Balance Sheet;

b) Business operation results report;

c) Cash flow statement;

d) The explanatory note of the financial report.

d) Notes to the financial statements.

4. The Ministry of Finance shall specify detailed provisions on financial reports for each field of activity.

Article 30. Preparing Financial Reports

1. Accounting entities must prepare financial reports at the end of the accounting year; if the law stipulates the preparation of financial reports for other accounting periods, the accounting entity must prepare them accordingly.

2. The preparation of financial reports must be based on figures after closing the accounting books. Higher-level accounting entities must prepare consolidated financial reports or consolidated financial statements based on the financial reports of the accounting entities within the same higher-level accounting entity.

3. Financial reports must be prepared with consistent content, methods, and presentation across accounting periods; if the presentation of financial reports differs between accounting periods, the reasons must be clearly explained.

Article 31. Deadline for Submitting Financial Reports

1. The annual financial report of accounting units must be submitted to the competent state agency within ninety days from the end date of the annual accounting period as prescribed by law; for the final budget report, the submission deadline shall be implemented according to the Government's regulations.

2. The Government shall specify the deadlines for submitting financial reports and final budget reports for each field of activity and each level of management.

Article 32. Content of Publicizing Financial Reports

1. The content of publicizing financial reports of accounting units involved in government revenue and expenditure activities, administrative agencies, public institutions, organizations using state budget funds, and public institutions and organizations not using state budget funds includes:

a) Accounting units involved in government revenue and expenditure activities shall publicize the final settlement of government revenue and expenditure for the year;

b) Accounting units that are administrative agencies, public institutions, and organizations using state budget funds shall publicize the final settlement of government revenue and expenditure for the year and other financial revenues and expenditures;

c) Accounting units that are public institutions and organizations not using state budget funds shall publicize the final settlement of financial revenue and expenditure for the year;

d) Accounting units that use contributions from the people shall publicize the purpose of raising and using contributions, contributors, contribution levels, results of use, and the final settlement of each contribution.

2. The content of publicizing financial reports of accounting units involved in business operations includes:

a) Asset situation, liabilities, and equity;

b) Business operation results;

c) Establishment and use of reserves;

d) Income of employees.

3. Financial reports of accounting units that have been audited when publicized must be accompanied by the audit organization's conclusion.

Article 33. Forms and Deadlines for Publicizing Financial Reports

1. Publicizing financial reports shall be carried out through the following forms:

a) Publishing printed materials;

b) Written notification;

c) Posting;

d) Other forms as prescribed by law.

2. Accounting units involved in government revenue and expenditure activities must publicize their annual financial reports within sixty days from the date they are approved by the competent authority.

3. Accounting units that are administrative agencies, public institutions, organizations using state budget funds, public institutions and organizations not using state budget funds, and accounting units that use contributions from the people must publicize their annual financial reports within thirty days from the date they are approved by the competent authority.

4. Accounting units involved in business operations must publicize their annual financial reports within two hundred and twenty days from the end date of the annual accounting period.

Article 34. Auditing Financial Reports

1. Annual financial reports of accounting units that are required by law to be audited must be audited before being submitted to the competent state agency and before being publicized.

2. When being audited, accounting units must comply with all legal provisions on auditing.

3. Financial reports that have been audited when submitted to the competent state agency as stipulated in Article 31 of this Law must be accompanied by an attached audit report.

Section 4: ACCOUNTING AUDIT

Article 35. Accounting Audit

The accounting unit must undergo an accounting audit by the competent authority and not more than once for the same content in a year. The accounting audit can only be carried out when there is a decision from the competent authority as prescribed by law.

Article 36. Content of Accounting Audit

1. The content of the accounting audit includes:

a) Checking the implementation of accounting tasks;

b) Checking the organization of the accounting structure and accountants;

c) Checking the management and professional activities of accounting;

d) Checking compliance with other provisions of the law on accounting.

2. The content of the accounting audit must be determined in the audit decision.

Article 37. Rights and Responsibilities of the Accounting Audit Team

1. When conducting an accounting audit, the accounting audit team must present the accounting audit decision. The accounting audit team has the right to request the audited accounting unit to provide relevant accounting documents related to the audit content and explain when necessary.

2. Upon completion of the accounting audit, the accounting audit team must prepare an audit report and hand over one copy to the audited accounting unit; if violations of the law on accounting are discovered, they shall be handled according to their authority or transferred to the competent state agency for handling in accordance with the law.

3. The head of the accounting audit team is responsible for the conclusions of the audit.

4. The accounting audit team must comply with the procedures, content, scope, and time frame of the audit, without affecting normal operations and must not harass the audited accounting unit.

Article 38. Responsibilities and Rights of the Audited Accounting Unit

1. The audited accounting unit has the responsibility:

a) To provide the accounting audit team with relevant accounting documents related to the audit content and explain the contents as required by the audit team;

b) To implement the conclusions of the accounting audit team.

2. The audited accounting unit has the right:

a) To refuse the audit if it finds that the audit exceeds the authority or the audit content contradicts the provisions of Article 36 of this Law;

b) To appeal against the conclusions of the accounting audit team to the competent authority deciding the audit; in case of disagreement with the conclusion of the competent authority deciding the audit, it shall be handled in accordance with the law.

Section 5: ASSET INVENTORY, PRESERVATION,

STORAGE OF ACCOUNTING DOCUMENTS

Article 39. Asset Inventory

1. Asset inventory involves weighing, measuring, counting quantities; confirming and evaluating the quality and value of assets and current capital at the time of inventory to check and reconcile with the figures in the accounting books.

2. The accounting unit must conduct asset inventory in the following cases:

a) At the end of the accounting year period, before preparing financial statements;

b) In the event of division, separation, merger, consolidation, dissolution, cessation of operations, bankruptcy, or sale, lease, or transfer of enterprises;

c) In the event of a change in enterprise ownership form;

d) In the event of fire, flood, and other extraordinary losses;

đ) Revaluation of assets according to the decision of the competent state agency;

f) Other cases as prescribed by law.

3. After completing the asset inventory, the accounting unit must prepare a consolidated report on the results of the inventory. If there is a discrepancy between the actual figures of the inventory and the figures recorded in the accounting books, the accounting unit must determine the cause and reflect the discrepancy and the result of its resolution in the accounting books before preparing the financial statements.

4. The inventory must accurately reflect the actual assets and sources of asset formation. The person preparing and signing the consolidated report on the results of the inventory is responsible for the results of the inventory.

Article 40. Accounting Document Preservation and Storage

1. Accounting documents must be fully preserved safely during their use and storage by the accounting unit.

2. Stored accounting documents must be original copies. In cases where accounting documents are temporarily seized or confiscated, there must be an accompanying record with a certified copy; if lost or destroyed, there must be an accompanying record with a copy or certification.

3. Accounting documents must be transferred to storage within twelve months from the end of the annual accounting period or the completion of accounting work.

4. The legal representative of the accounting unit is responsible for organizing the preservation and storage of accounting documents.

5. Accounting documents must be stored according to the following periods:

a) At least five years for accounting documents used for management and operation of the accounting unit, including accounting vouchers not directly used for recording in accounting books and preparing financial statements;

b) At least ten years for accounting vouchers directly used for recording in accounting books and preparing financial statements, annual accounting books and financial reports, except where otherwise provided by law;

c) Permanently for accounting documents with archival value, significant economic, security, and defense importance.

6. The Government shall specify in detail each type of accounting document required to be stored, the storage period, the time point for calculating the storage period as stipulated in Clause 5 of this Article, the storage location, and the procedures for destroying stored accounting documents.

Article 41. Accounting Work When Accounting Documents Are Lost or Destroyed

Upon discovering that accounting documents have been lost or destroyed, the accounting unit must immediately carry out the following tasks:

1. Inspect, determine, and prepare a record regarding the quantity, condition, and cause of the loss or destruction of accounting documents, and notify relevant organizations, individuals, and competent state agencies;

2. Organize the recovery of damaged accounting documents;

3. Contact organizations and individuals involved in transactions related to accounting documents and data to obtain copies or confirmations of lost or destroyed accounting documents;

4. For accounting documents related to assets but which cannot be recovered through the measures specified in Clauses 2 and 3 of this Article, an asset inventory must be conducted to recreate the lost or destroyed accounting documents.

Section 6: ACCOUNTING WORK IN CASES OF DIVISION, SEPARATION, MERGER, CONSOLIDATION, CHANGE IN FORM OF OWNERSHIP, DISSOLUTION, TERMINATION OF OPERATIONS, BANKRUPTCY OF THE ACCOUNTING UNIT

Article 42. Accounting Work in Cases of Division of the Accounting Unit

1. The accounting unit being divided into new accounting units must carry out the following tasks:

a) Close accounting books, inventory assets, determine outstanding debts, and prepare financial statements;

b) Allocate assets, outstanding debts, prepare transfer records, and record in accounting books according to the transfer records;

c) Transfer accounting documents related to assets and outstanding debts to the new accounting units.

2. The newly established accounting units shall base on the transfer records to open accounting books and record in accordance with the provisions of this Law.

Article 43. Accounting Work in Cases of Separation of the Accounting Unit

1. The accounting unit separating a part to establish a new accounting unit must carry out the following tasks:

a) Inventory assets and determine outstanding debts of the separated part;

b) Transfer assets and outstanding debts of the separated part, prepare transfer records, and record in accounting books according to the transfer records;

c) Transfer accounting documents related to assets and outstanding debts to the new accounting unit; for accounting documents not transferred, the separated accounting unit shall store them according to the provisions of Article 40 of this Law.

2. The newly established accounting units shall base on the transfer records to open accounting books and record in accordance with the provisions of this Law.

Article 44. Accounting work in the case of consolidation of accounting units

1. When accounting units are consolidated into a new accounting unit, each consolidated accounting unit must perform the following tasks:

a) Close accounting books, inventory assets, determine outstanding debts, and prepare financial statements;

b) Transfer all assets, unpaid debts, prepare a handover record, and record in the accounting ledger according to the handover record;

c) Transfer all accounting documents to the consolidated accounting unit.

2. The consolidated accounting unit must perform the following tasks:

a) Based on the handover records, open accounting ledgers and record in the accounting ledgers;

b) Consolidate the financial reports of the consolidated accounting units into the financial report of the consolidated accounting unit.

Article 45. Accounting work in the case of merger of accounting units

1. An accounting unit that merges into another accounting unit must perform the following tasks:

a) Close accounting books, inventory assets, determine outstanding debts, and prepare financial statements;

b) Transfer all assets, unpaid debts, prepare a handover record, and record in the accounting ledger according to the handover record;

c) Transfer all accounting documents to the receiving accounting unit for merger.

2. The receiving accounting unit for merger must, based on the handover record, record in the accounting ledger according to the provisions of this Law.

Article 46. Accounting work in the case of change in ownership form

1. An accounting unit that changes its ownership form must perform the following tasks:

a) Close accounting books, inventory assets, determine outstanding debts, and prepare financial statements;

b) Transfer all assets, unpaid debts, prepare a handover record, and record in the accounting ledger according to the handover record;

c) Transfer all accounting documents to the accounting unit with the new ownership form.

2. The accounting unit with the new ownership form must, based on the handover record, open accounting ledgers and record in the accounting ledgers according to the provisions of this Law.

Article 47. Accounting work in the case of dissolution, cessation of operations, bankruptcy

1. An accounting unit that is dissolved or ceases operations must perform the following tasks:

a) Close accounting books, inventory assets, determine outstanding debts, and prepare financial statements;

b) Open accounting ledgers to track economic and financial transactions related to dissolution or cessation of operations;

c) Transfer accounting documents of the dissolved or ceased operation accounting unit to the superior accounting unit or organization/person responsible for storage after completion, as stipulated in Article 40 of this Law.

2. In the event that an accounting unit is declared bankrupt, the Bankruptcy Court shall designate a person to carry out accounting work as provided for in Clause 1 of this Article.

Chapter 3:

ORGANIZATION OF ACCOUNTING DEPARTMENT AND ACCOUNTANTS

Article 48. Organization of accounting department

1. An accounting unit must organize an accounting department, and arrange personnel to be accountants or hire accountants.

2. An accounting unit must arrange a chief accountant. If the accounting unit cannot arrange a chief accountant, it must appoint a deputy chief accountant or hire a chief accountant (hereinafter referred to collectively as chief accountant).

3. In cases where an agency or enterprise has a superior accounting unit and a grassroots accounting unit, the accounting department shall be organized in accordance with the law.

Article 49. Responsibilities of the legal representative of the accounting unit

1. Organize the accounting department, arrange personnel to be accountants and chief accountants in accordance with the standards and conditions prescribed in this Law.

2. Decide on hiring accountants and chief accountants.

3. Organize and direct the implementation of accounting work in the accounting unit in accordance with the law on accounting and bear responsibility for the consequences caused by their own violations.

Article 50. Standards, rights, and responsibilities of accountants

1. Accountants must meet the following standards:

a) Have professional ethics, honesty, integrity, and a sense of compliance with the law;

b) Have professional qualifications and expertise in accounting.

2. Accountants have the right to independence in professional and technical matters in accounting.

3. Accountants have the responsibility to comply with the provisions of the law on accounting, perform assigned tasks, and be accountable for their professional and technical matters. When changing accountants, the outgoing accountant must be responsible for handing over accounting work and accounting documents to the incoming accountant. The outgoing accountant must be responsible for accounting work during their tenure as an accountant.

Article 51. Persons not eligible to be accountants

1. Minors; persons with restricted or lack of capacity for civil acts; persons currently being placed in educational facilities, medical facilities, or under administrative control.

2. Persons currently prohibited from practicing their profession or from being an accountant pursuant to court judgments or decisions; persons currently under criminal prosecution; persons currently serving a prison sentence or who have been convicted of economic crimes, crimes related to positions involving finance and accounting, and have not yet had their criminal records expunged.

3. Father, mother, wife, husband, children, brothers, sisters of persons responsible for managing and directing the accounting unit, including the chief accountant within the same state-owned enterprise, joint-stock company, cooperative, state agency, public institution, organization using state budget funds, public institution, non-budget-funded organization.

4. Storekeepers, treasurers, buyers, sellers of assets within the same state-owned enterprise, joint-stock company, cooperative, state agency, public institution, organization using state budget funds, public institution, non-budget-funded organization.

Article 52. Chief Accountant

1. The chief accountant has the duty to organize and implement accounting work in the accounting unit in accordance with the provisions of Article 5 of this Law.

2. The chief accountant of state agencies, public institutions, organizations using state budget funds, public institutions, non-budget-funded organizations, and state-owned enterprises, in addition to the duties specified in Clause 1 of this Article, also has the duty to assist the legal representative of the accounting unit in supervising finances at the accounting unit.

3. The chief accountant is subject to the leadership of the legal representative of the accounting unit; in cases where there is a higher-level accounting unit, they simultaneously are subject to the direction and supervision of the higher-level chief accountant regarding professional and technical matters.

4. In cases where the accounting unit appoints a person to temporarily replace the chief accountant, such person must meet the criteria stipulated in Clause 1 of Article 50 of this Law and must perform the tasks, responsibilities, and rights assigned to the chief accountant.

Article 53. Criteria and Conditions for Chief Accountants

1. The chief accountant must meet the following criteria:

a) The criteria stipulated in Clause 1 of Article 50 of this Law;

b) Possess intermediate level expertise and experience in accounting or higher;

c) Have at least two years of practical work experience in accounting for those with a bachelor's degree or higher in accounting, and at least three years for those with intermediate level expertise in accounting.

2. Persons serving as chief accountant must hold a certificate from an advanced training course for chief accountants.

3. The Government shall specify detailed criteria and conditions for chief accountants suitable for each type of accounting unit.

Article 54. Responsibilities and Rights of Chief Accountants

1. The chief accountant has the responsibility to:

a) Implement legal regulations on accounting and finance in the accounting unit;

b) Organize and manage the accounting system according to this Law;

c) Prepare financial reports.

2. The chief accountant has the right to independence in professional and technical matters related to accounting.

3. The chief accountant of state agencies, public institutions, organizations using state budget funds, public institutions, non-budget-funded organizations, and state-owned enterprises, in addition to the rights already specified in Clause 2 of this Article, also has the right to:

a) Provide written opinions to the legal representative of the accounting unit regarding the recruitment, transfer, salary increase, rewards, and disciplinary actions for accountants, storekeepers, and treasurers;

b) Request relevant departments within the accounting unit to provide complete and timely documentation related to accounting work and financial oversight conducted by the chief accountant;

c) Reserve professional opinions in writing when differing from the decision-maker's opinion;

d) Report in writing to the legal representative of the accounting unit upon discovering violations of financial and accounting laws within the unit; if still required to comply with the decision, report it to the immediate superior of the decision-maker or the competent state authority and shall not be held responsible for the consequences of implementing that decision.

Chapter 4:

ACCOUNTING PROFESSIONAL ACTIVITIES

Article 55. Engaging in Accounting Profession

1. Organizations and individuals meeting the conditions prescribed by law have the right to engage in the accounting profession.

2. Business organizations providing accounting services must establish an accounting service business in accordance with the provisions of the law. The manager of an accounting service business must hold an accounting practice certificate issued by a competent state agency as stipulated in Article 57 of this Law.

3. Individuals engaging in the accounting profession must hold an accounting practice certificate issued by a competent state agency as stipulated in Article 57 of this Law and must register for accounting service business.

Article 56. Hiring for Accounting, Hiring for Chief Accountant Position

1. An accounting unit may enter into a contract with an accounting service business or an individual registered for accounting service business to hire for accounting work or to hire for the chief accountant position in accordance with the provisions of the law.

2. The hiring for accounting work, hiring for the chief accountant position must be established in a written contract in accordance with the provisions of the law.

3. An accounting unit hiring for accounting work, hiring for the chief accountant position has the responsibility to provide all relevant information and documents related to the hired accounting work and chief accountant position promptly and truthfully, and to pay the accounting service fee fully and promptly as agreed upon in the contract.

4. The person hired for the chief accountant position must meet the criteria and conditions stipulated in Article 53 of this Law.

5. Businesses and individuals providing accounting services and the person hired for the chief accountant position must bear responsibility for the accounting information and figures according to the agreement in the contract.

Article 57. Accounting Practice Certificate

1. Vietnamese citizens eligible for an accounting practice certificate must meet the following standards and conditions:

a) Possess professional ethics, honesty, integrity, and a sense of compliance with the law; not falling under the categories specified in Clause 1 and Clause 2 of Article 51 of this Law;

b) Have expertise and vocational knowledge in finance and accounting at the bachelor level or higher and have at least five years of practical experience in finance and accounting;

c) Pass the examination organized by a competent state agency.

2. Foreigners eligible for an accounting practice certificate must meet the following standards and conditions:

a) Be permitted to reside in Vietnam;

b) Hold a certified public accountant certificate or an accounting certificate issued by a foreign organization or an international accounting organization recognized by the Ministry of Finance of Vietnam;

c) Pass the examination on Vietnamese economic, financial, and accounting laws organized by a competent state agency.

3. The Ministry of Finance shall prescribe the training program, examination board, procedures, authority to issue and revoke the accounting practice certificate in accordance with this Law and other relevant legal provisions.

Article 58. Right to Participate in Accounting Professional Organizations

Accounting units and accountants have the right to join the Vietnam Accounting Association or other accounting professional organizations for the purpose of developing the accounting profession and protecting the legitimate rights and interests of members in accordance with the law.

Chapter 5:

STATE MANAGEMENT OF ACCOUNTING

Article 59. Contents of State Management of Accounting

The contents of state management of accounting include:

1. Developing and directing the implementation of strategies, planning, and plans for accounting development;

2. Issuing, disseminating, directing, and organizing the implementation of legal documents on accounting;

3. Inspecting accounting; inspecting accounting service activities;

4. Guiding accounting practice activities, organizing examinations, issuing and revoking accounting practice certificates;

5. Guiding and organizing accounting vocational training and continuing education;

6. Organizing and managing scientific research on accounting and the application of information technology in accounting activities;

7. International cooperation in accounting;

8. Resolving complaints and handling violations of accounting laws.

Article 60. State Management Authority for Accounting

1. The Government shall uniformly manage state affairs concerning accounting.

2. The Ministry of Finance shall be responsible before the Government for performing the function of managing state affairs concerning accounting.

3. Ministries and ministerial-level agencies within the scope of their assigned tasks and authorities shall be responsible for managing state affairs concerning accounting in their respective sectors and fields.

4. People's Committees of provinces and centrally governed cities within the scope of their assigned tasks and authorities shall be responsible for managing state affairs concerning accounting at the local level.

Chapter 6:

REWARD AND VIOLATION HANDLING

Article 61. Awards

Organizations and individuals with achievements in accounting activities shall be awarded according to the provisions of the law.

Article 62. Handling of Violations

Organizations and individuals who violate the law on accounting shall be subject to disciplinary action, administrative penalties, or criminal prosecution depending on the nature and severity of the violation; if damage is caused, they must compensate according to the provisions of the law.

Chapter 7:

IMPLEMENTING PROVISIONS

Article 63. Effective Date

1. This Law shall take effect from January 1, 2004.

2. The Accounting and Statistics Ordinance dated May 10, 1988 shall cease to be effective from the date this Law takes effect.

Article 64. Detailed Provisions and Guidance for Implementation

The Government shall promulgate detailed regulations and provide guidance on the implementation of this Law.

This Law was adopted by the National Assembly of the Socialist Republic of Vietnam, the eleventh session, third meeting, on June 17, 2003.