Circular No. 07/TC-TCDN guiding the preparation and verification of financial reports for state-owned enterprises in 1996

The preparation of financial reports by enterprises shall be carried out in accordance with the provisions set forth in the "Enterprise Accounting System" issued together with Decision No. 1141 TC/QĐ/CĐKT dated November 1, 1995 of the Minister of Finance and the model financial regulations of State-owned Corporations issued together with Decision No. 838 TC/TCDN dated August 28, 1996 of the Minister of Finance, noting the following issues:

1. The results of rechecking capital and assets on January 1, 1996 must be reflected in the enterprise's accounting records according to the notification of the results of the review by the agency managing state capital and assets at the enterprise. The calculation of depreciation of fixed assets and the use of budget funds must be based on the notified figures.

2. Enterprises must conduct an inventory of assets (fixed assets, current assets) and reconcile receivables and payables before preparing financial reports. Any discrepancies between the inventory and reconciliation figures and the book figures must be clearly identified and resolved in accordance with current regulations. The consolidated report of asset inventory and reconciliation of receivables and payables of the enterprise must be submitted along with the financial report to the agency managing state capital and assets at the enterprise.

3. For changes in depreciation of fixed assets in 1996, enterprises shall still implement Decision No. 51/TTg dated January 21, 1995 of the Prime Minister and Circular No. 36 TC/TCDN dated April 27, 1995 of the Ministry of Finance. The final deadline for submitting files to handle changes in depreciation is June 30, 1997.

4. Enterprise expenses incurred in 1996 shall be implemented in accordance with current regulations applicable throughout 1996 (prior to Decree No. 59/CP and the guiding circulars of the Ministry of Finance). The wage fund of the enterprise shall be calculated based on the approved wage rate by the competent authority or registered with the competent authority in accordance with Joint Circular No. 20 LB/TT dated June 2, 1993 of the Ministry of Labor - Invalids and Social Affairs - Finance.

5. For losses from previous years, enterprises may deduct them from pre-tax profits in accordance with the Corporate Income Tax Law and guiding documents (Decree No. 57/CP dated August 28, 1993 of the Government, Circular No. 75A TC/TCT dated August 31, 1993 of the Ministry of Finance, Official Letter No. 348/KTTH dated January 21, 1995 of the Government Office, and Circular No. 1167 TC/TCDN dated May 10, 1995 of the Ministry of Finance). Upon expiration of the loss carryforward period as prescribed, enterprises shall use post-tax profits to offset remaining losses before setting up enterprise funds. Cases of exceeding the prescribed loss carryforward period require approval from the Prime Minister.

6. The level of establishment of enterprise funds shall continue to be implemented in accordance with Circular No. 12TC/CN dated February 23, 1994 of the Ministry of Finance, applicable to the establishment of enterprise funds for 1994 and 1995.

7. Financial reports of enterprises must be prepared in accordance with the enterprise accounting system issued together with Decision No. 1141TC/QĐ/CĐKT of the Minister of Finance. Specifically:

+ Balance sheet

+ Results of business operations

+ Notes to financial statements.

Reports must comply with the prescribed format and be submitted to relevant state management agencies. In particular, the consolidated financial report of state-owned corporations must be submitted to the State Capital and Asset Management General Department (Ministry of Finance) and other state management agencies as stipulated for independent state-owned enterprises.

For dependent enterprises when submitting financial reports to their superiors, they must also submit to the State Capital and Asset Management General Department, the local tax bureau where the enterprise is headquartered.

8. Currently, there are no guidelines for internal auditing, and the internal auditing force and independent auditing are limited, so the financial reports for 1996 do not necessarily require signatures from internal auditors or independent auditors. The state encourages enterprises to conduct internal auditing through the Corporation organizing audits for member enterprises or hiring independent auditing companies to perform audits before submitting financial reports to functional agencies.

According to the spirit of Decree No. 59/CP regulating financial systems and business accounting for state-owned enterprises, the finance department does not approve the 1996 financial reports of state-owned enterprises. After completing the submission of financial reports to functional agencies, enterprises shall publicly disclose their finances in accordance with Circular No. 73 TC/TCDN dated November 12, 1996 of the Ministry of Finance. Based on the financial reports of enterprises, the State Capital and Asset Management General Department will compile and analyze the situation of state-owned enterprises by region and economic sector to report to the Ministry of Finance and related agencies.

The Ministry of Finance assigns the State Capital and Asset Management General Department to take the lead in coordinating with the tax authority to organize the inspection of financial reports of state-owned enterprises in 1996.

The inspection of financial reports shall be conducted after enterprises have submitted their reports to functional agencies. Prior to conducting inspections, notice must be given to enterprises regarding the inspection time to allow enterprises to arrange their work. The content of the inspection may be comprehensive or focused on one or several issues depending on the situation of the enterprise and the inspection force. At the end of the inspection, a record must be established detailing the correct and incorrect points of the enterprise and recommendations for handling. If violations of financial management regulations such as incorrect accounting leading to loss of state capital or failure to fulfill tax obligations are discovered during the inspection, the enterprise shall bear legal responsibility for its errors.

In 1996, which is the first year to implement the removal of final account approval and enterprises conducting public financial disclosure, the inspection needs to be carried out promptly and strictly supervised. Issues arising need to be reported and resolved in a timely manner.

This Circular takes effect from the date of issuance and applies to the preparation and verification of financial report data for the 1996 fiscal year of state-owned enterprises.

Any difficulties encountered during implementation should be reported to the Ministry of Finance for study and resolution.