Circular No. 05-TC/CN guiding the implementation of Directive No. 408-CT dated November 20, 1990, issued by the Chairman of the Council of Ministers on rectifying financial accounting and economic accounting work of state-owned enterprises.

CIRCULAR

DIRECTIVE NO. 05-TC/CN OF THE MINISTRY OF FINANCE ON IMPLEMENTING THE DIRECTIVE NO. 408-CT OF THE STATE COUNCIL CHAIRMAN REGARDING THE IMPROVEMENT OF FINANCIAL ACCOUNTING AND ECONOMIC RECORDING WORK IN STATE ENTERPRISES ISSUED ON NOVEMBER 20, 1990

The Chairman of the Council of Ministers issued Directive No. 408-CT on November 20, 1990 regarding the improvement of financial accounting and economic recording work in state enterprises, emphasizing several urgent measures that need to be implemented immediately to address weaknesses in financial management and accounting, promote production development, ensure effective business operations, and safeguard capital.

The Ministry of Finance provides detailed guidance on implementing these measures as follows:

1. Each General Corporation, Company, and state enterprise must develop plans to reorganize production at the enterprise level based on the utilization of existing equipment capacity; modernize production lines, change product lines, and improve product quality to meet market preferences and demands; pricing strategies for products; capital mobilization capabilities; organization of joint ventures and collaborations for material supply, production processing, or product sales; research and application of scientific and technological advancements; and labor organization to enhance productivity and ensure effective business operations while fulfilling tax obligations to the State budget.

For enterprises with prolonged losses and insignificant roles in the national economy that are not eligible for government subsidies, if it is determined that they cannot be salvaged, they must be dissolved according to the provisions of Decision No. 315-HĐBT dated September 1, 1990 of the Council of Ministers and Circular No. 54-TC/CN dated November 13, 1990 of the Ministry of Finance guiding the implementation of the aforementioned decision.

2. Improving financial accounting work in companies and enterprises:

a. Implementing the capital allocation to units as stipulated in Decision No. 316-CT/HĐBT dated September 1, 1990 of the Chairman of the Council of Ministers and Circulars guiding Nos. 41-TC/VKH dated September 18, 1990 and No. 51-TC/VKH dated October 27, 1990 of the Ministry of Finance.

Enterprises should base their current capital sources, including state budget funds, self-supplemented funds, and other occupied funds, on the results of asset inventory and assessment as of midnight on January 1, 1990, particularly focusing on accurately identifying state budget funds to create conditions and foundations for calculating the amount of capital usage fees (when established and implemented).

Capital allocation will be piloted in some units first, while simultaneously expanding the scope to quickly establish a sound system for managing and utilizing capital, ensuring capital preservation and growth, and enhancing operational efficiency to implement the capital usage fee system in all state-owned economic units.

b. Strictly adhering to depreciation and capital utilization regulations for fixed assets as specified in Circular No. 33-TC/CN dated July 31, 1990 of the Ministry of Finance.

c. Enterprises should independently establish economic and technical standards for raw material consumption, energy, labor, and wage rates suitable for their production and business characteristics, but these standards must ensure savings and not exceed those set by the state or higher-level management bodies if applicable; at the same time, they must reduce input and output costs to levels that can be sustained and ensure profitable production and business operations.

d. Accurately accounting for enterprise management expenses:

- Enterprises should rearrange labor and handle surplus labor according to the spirit of Decision No. 176-HĐBT dated October 9, 1989 of the Chairman of the Council of Ministers, reduce indirect costs, and maintain a reasonable ratio between indirect and direct departments based on industry-specific production and business characteristics.

- Enterprises may not use working capital or investment funds for construction, purchasing office equipment, or vehicles. They must strictly conserve electricity and fuel.

- Each corporation and enterprise must establish reasonable transaction expense systems, hospitality protocols, gift-giving policies, and incentives for organizations and individuals who assist in production and business activities, including hosting foreign guests and sending personnel abroad for transactions. These systems must be approved by the higher-level management body (the principal ministry, provincial or municipal People's Committee, special zone administration) based on principles of thrift, prevention of abuse, prohibition of bribery in any form, prohibition of using public funds for personal expenses, and prohibition of using company funds for gifts. It is forbidden to convert public property into private assets. Year-end bonuses for individuals and units must be signed by the awarding authority and the recipient.

All transaction expenses mentioned above must be recorded clearly and honestly according to initial documentation rules and publicly disclosed within the enterprise.

- Enterprises must comply with specific regulations on advance payment and cash expenditure systems: all expenditures in enterprises must go through two stages:

+ There must be a budget for spending and approval from the competent authority. The person responsible for spending must bear responsibility for any unauthorized, wasteful spending that creates opportunities for corruption, bribery, and embezzlement.

+ Expenditures must be settled based on valid and legal invoices and supporting documents.

The Chief Accountant of the enterprise must strictly adhere to the Charter of the Chief Accountant already promulgated and fulfill their role and function in supervising the aforementioned expenditures.

- Each corporation and enterprise must establish reasonable advertising and sample goods expense systems based on practical effectiveness without unnecessary showmanship or waste.

3. Each company and enterprise must fully fulfill their obligations to pay the State Budget in accordance with tax laws and current regulations. In cases where units fail to fulfill or delay their obligation to pay the state budget, upon request from the competent financial authority, the Bank shall deduct funds from the enterprise's account to pay into the state budget.

For essential products of the national economy that genuinely incur losses due to full cost pricing and the state still sets the selling price, the Ministry of Finance shall implement price subsidies based on the Council of Ministers' decision regarding specific product categories eligible for such subsidies.

4. Each enterprise must develop plans to practice thrift in production and business operations, construction of technical infrastructure, and income distribution.

The enterprise's plan to practice thrift must include the following basic contents:

Based on analyzing and evaluating weak links and wasteful aspects in production and business operations of the unit, identifying specific measures for practicing thrift, particularly focusing on the following stages:

- Reducing consumption of raw materials and supplies. Paying attention to the application of scientific and technological progress and modernizing production lines to lower product costs.

- Reducing management expenses (such as transaction fees, hospitality expenses, rewards, etc., as mentioned above), expenses during the signing and implementation of material purchase and product sales contracts, exploiting connections to profit from price differences, especially in the management stage of construction projects: (withdrawing state funds through increased project budget prices and contracts between A-B...).

- The plan to practice thrift must be widely discussed among the enterprise's staff, with participation from mass organizations, and encourage the support of all workers.

Within the scope of the reward fund allocated from the enterprise, including the portion derived from additional profits due to thrift practices, the enterprise director shall establish and implement rewards and penalties for thrift or waste incidents within the enterprise.

5. Each company and enterprise must strictly comply with the Accounting and Statistics Ordinance of the State Council as promulgated by Decree No. 6-LCT/HĐNN dated May 20, 1980, and guided by Circular No. 475-TC/CĐKT dated April 24, 1989 of the Ministry of Finance.

Particularly emphasizing strict adherence to the system of initial documentation. Strictly prohibiting the creation of false or untruthful documents.

Accurately record all types of revenue of the entity: main production revenue, secondary production revenue, non-core business revenue, and other consumption revenues of the enterprise... Absolutely no revenue should be omitted from the official accounting records.

Correctly and fully recording production costs and product sales revenue also aims to eliminate the situation of fictitious profits and actual losses, or fictitious losses and actual profits.

Financial authorities at all levels (the Ministry of Finance for central companies and enterprises; Provincial Finance Departments for local enterprises) shall conduct regular accounting audits: quarterly, semi-annually, or annually (but not less than once a year) for each economic base unit.

The enterprise's chief accountant is directly responsible before legal authorities for implementing the Statistics and Accounting Ordinance at the enterprise.

6. Leaders of ministries and sectors in charge are responsible for consolidating financial departments of ministries at various stages: organizational structure and professional expertise, sufficient capacity to perform advisory functions for ministry leadership in directing financial and accounting work as a crucial tool to ensure effective production and business operations; monitoring, guiding, and auditing financial and accounting work of subordinate production and business units.

Ministries in charge, provincial and municipal People's Committees, special zone administrations, General Companies, and Companies with state-owned enterprises at both central and local levels need to organize research and widely disseminate, with planned implementation of Directive No. 408-CT of the Chairman of the Council of Ministers and the circulars guiding the implementation of this directive issued by relevant ministries.

This Circular takes effect from the date of issuance.