Circular No. 107/2017/TT-BTC guiding the Accounting System for Administrative and Public Institutions

CIRCULAR

Guidelines for Administrative and Public Institution Accounting System

Pursuant to the Accounting Law No. 88/2015/QH13 dated November 20, 2015;

Pursuant to Decree No. 174/2016/NĐ-CP dated December 30, 2016 of the Government detailing and guiding the implementation of certain provisions of the Accounting Law;

Decree No. 87/2017/ND-CP dated Februarysix months 7, 2017 of the Government stipulates the functions, tasks, powers, and organizational structure of the Ministry of Finance;

At the proposal of Director of the Department of Accounting and Auditing Systems,

The Minister of Finance issues this Circular guiding Administrative and Public Institution Accounting System.

PART I

GENERAL PROVISIONS

Article 1. Scope of application

This Circular guides the list of mandatory accounting vouchers and methods for preparing such vouchers; the list of accounting accounts and methods for accounting entries; the list of accounting ledgers and methods for preparing ledgers; the list of reports and methods for preparing and presenting financial statements and final accounts of budgetary units as specified in Article 2 of this Circular.

Article 2. Applicability

1. This Circular guides accounting for: State agencies; public institutions, except public institutions that self-finance their regular expenses and investment costs and apply financial mechanisms similar to enterprises, adopting enterprise accounting systems when meeting the current conditions; other organizations and units that use or do not use state budget (hereinafter referred to as administrative and public institution units).

2. For public institutions that self-finance regular expenses and

investment costs and apply enterprise accounting systems, if they undertake government orders or receive non-repayable foreign aid or have retained fee sources, they must prepare the final account report as specified in Appendix 04 of this Circular.

Chapter II

SPECIFIC PROVISIONS

Article 4. Provisions on accounting vouchers

1. All administrative and public institution units must uniformly use the mandatory accounting voucher models prescribed in this Circular. During implementation, these units may not modify the mandatory accounting voucher models.

2. In addition to the mandatory accounting vouchers prescribed in this Circular and other documents, administrative and public institution units may design accounting voucher models to reflect emerging economic transactions. Self-designed voucher models must meet at least seven contents stipulated in Article 16 of the Accounting Law, be consistent with recording requirements and management needs of the unit.

3. Pre-printed voucher forms must be carefully preserved and not allowed to become damaged or deteriorate. Checks, Receipts, and valuable papers must be managed like cash.

4. The list, models, and explanations of methods for preparing mandatory accounting vouchers prescribed in Appendix 01 attached to this Circular.

Article 5. Provisions on accounting accounts

1. Accounting accounts reflect regularly, continuously, systematically the situation regarding assets, receipt and use of funds from the state budget and other sources; the situation of income and expenditure activities, activity results, and other items in administrative and public institution units.

2. Classification of the accounting account system:

a) Types of accounts in the table include accounts from type 1 to type 9, which are double-entry (double-entry bookkeeping between accounts). Accounts in the table are used for financial accounting (shortened as financial accounting), applicable to all units, reflecting the financial situation, receivables and payables, capital sources, revenue, expenses, surplus (deficit) of the unit during the accounting period.

b) Types of accounts outside the table include type 0 accounts, which are single-entry (no double-entry bookkeeping between accounts). Accounts outside the table related to the state budget or having a state budget origin (Accounts 004, 006, 008, 009, 012, 013, 014, 018) must be reflected according to the state budget classification, by fiscal year (previous year, current year, next year (if applicable)), and according to other state budget management requirements.

c) In cases where a financial economic transaction occurs involving the receipt and use of: state budget funds; foreign aid and debt; retained fee sources, then accounting must record according to the accounts in the table while simultaneously recording the accounts outside the table, detailed according to the state budget classification and appropriate fiscal years.

3. Selection of applying the accounting account system:

a) Administrative and public institution units base on the Accounting Account System issued in this Circular to select accounting accounts applicable to the unit.

b) Units may supplement accounting accounts in the following cases:

- Supplement detailed accounts for accounts already specified in the list of the accounting account system (Annex No. 02) accompanying this Circular to meet management requirements of the unit.

- In case of supplementing parallel-level accounts with those already defined in the Accounting Account System (Appendix 02) attached to this Circular, it must be approved in writing by the Ministry of Finance before implementation.

4. The list of accounting accounts, explanations of content, structure, and methods of recording accounting accounts stated in Appendix 02 attached to this Circular.

Article 6. Provisions on accounting books

1. Administrative and public institution units must open accounting ledgers to record, systematize, and retain all economic and financial transactions that have occurred and are related to the accounting unit. The preservation and storage of accounting ledgers shall be carried out in accordance with the Accounting Law, relevant documents, and this Circular.

2. Administrative and public institution units that receive and use: state budget funds; foreign aid and debt; retained fee sources must open accounting ledgers to separately track according to the State Budget Classification and other requirements to serve the preparation of final accounts with the state budget and competent authorities.

3. Types of accounting ledgers

a) Each accounting unit shall use only one system of accounting ledgers for each fiscal year period, including general accounting ledgers and detailed accounting ledgers.

Depending on the accounting form applied by the unit, the unit must fully open general accounting ledgers, detailed accounting ledgers and implement fully, correctly the content, procedure, and method of recording for each type of ledger.

The budget and retained fee accounting ledger reflects in detail according to the state budget classification to monitor the use of state budget funds and retained fees.

The accounting ledger tracking the process of receiving and using foreign aid and debt reflects in detail according to the state budget classification as the basis for preparing final accounts as stipulated in this Circular and according to the requirements of the sponsor.

b) General ledger forms:

- The Journal is used to record economic and financial transactions as they occur chronologically. If necessary, chronological recording can be combined with categorization and systematization of economic and financial transactions according to their content. The figures in the Journal reflect the total amount of economic and financial transactions occurring in one accounting period.

- The General Ledger is used to record economic and financial transactions according to their economic content (accounting accounts). In the General Ledger, recording can be combined both in chronological order of occurrence and by the economic content of the economic and financial transactions. The figures in the General Ledger reflect the overall situation of assets, sources of funds, and the use of these funds.

c) Subsidiary ledger forms:

Detailed accounting books and cards are used to record detailed economic and financial transactions related to accounting objects as required for management purposes that the General Ledger does not reflect in detail. The figures in detailed accounting books provide specific information to serve internal management and the calculation and preparation of financial statements and final account reports for state budgets.

Based on management requirements and accounting needs for each individual accounting object, units are permitted to supplement indicators (columns, rows) in detailed accounting books and cards to serve the preparation of financial statements and final account reports as required by management.

4. Responsibilities of the person holding and recording accounting books

a) Accounting books must be strictly managed with clearly defined personal responsibilities for holding and recording. The employee to whom an accounting book is assigned must bear responsibility for the contents recorded in the book during the entire period of holding and recording the book.

b) When there is a change in the personnel responsible for holding and recording accounting books, the chief accountant or accounting supervisor must organize the transfer of management and recording responsibilities between the old and new accounting staff. The old accounting staff must be responsible for all contents recorded in the book during the entire period of holding and recording the book, while the new accounting staff will be responsible from the date of taking over. The handover record must be signed and confirmed by the chief accountant or accounting supervisor.

c) 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 the corresponding accounting vouchers used for recording.

d) 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 following year must continue those recorded in the accounting books of the previous year, ensuring continuity from the opening of the book to its closing.

5. Opening accounting books

a) Principles for opening accounting books

Accounting books must be opened at the beginning of the accounting year or immediately after the decision to establish and start operations of the accounting unit. Accounting books should be opened at the beginning of the new fiscal or budget year to transfer the balances from the previous year's accounting books and record new economic and financial transactions occurring from January 1 of the new fiscal or budget year.

Figures on accounting books tracking the receipt and use of state budget funds after December 31 are transferred from this year's account to last year's account to continue tracking figures during the period of adjusting final accounts, serving the preparation of final account reports for the state budget as prescribed.

Units may open additional detailed accounting books based on management requirements.

b) Case of opening accounting books manually (by hand):

The accounting unit must complete the legal procedures for accounting books as follows:

- For bound accounting books:

+ On the outside cover (upper left corner), the name of the accounting unit, the name of the book, the date of establishment of the book, the date of closing the book, the name and signature of the person establishing the book, the chief accountant or accounting supervisor, and the head of the unit signing and stamping must be recorded; the date of completion of recording or the date of transferring the book to another person.

+ Each page of the accounting book must be numbered from page one (01) to the last page, and a stamp must be affixed between two pages.

+ An accounting book is considered legal only after completing the above procedures.

- For loose-leaf accounting books:

+ At the beginning of each loose-leaf book, the name of the unit, the serial number of each sheet, the name of the book, the month of use, the name of the person holding and recording the book must be clearly recorded.

+ Loose-leaf books must be signed and stamped by the head of the unit and registered in the Register of Loose-Leaf Card Usage before use.

+ Loose-leaf books must be arranged in the order of accounting accounts and must ensure safety and ease of access.

c) Case of creating accounting books using electronic means:

It is necessary to ensure the elements of accounting books as stipulated by accounting laws. If choosing to store accounting books electronically, printed consolidated accounting books must still be produced on paper, bound into volumes, and the procedures specified in point b, Clause 5 of this Article must be completed.

For remaining accounting books, if not printed on paper but stored on electronic media, the head of the accounting unit must be responsible for ensuring the security and confidentiality of data and must ensure accessibility within the retention period.

6. Recording in accounting books

a) Recording in accounting books must be based on accounting vouchers; all figures recorded in accounting books must be supported by accounting vouchers; they must be clear, continuous, and systematic, without abbreviations, overlapping entries, or skipping lines.

b) In the case of manual recording, non-fading ink must be used, and red ink must not be used for recording in accounting books. Procedures for recording and accounting book formats as specified in Appendix No. 03 must be followed. When a page is fully recorded, the figures of each page must be summed up and carried forward to the next page; additional entries cannot be made above or below. If a page is not fully recorded, the unused portion must be crossed out diagonally; erasing is prohibited, and chemical substances must not be used to make corrections.

7. Closing accounting books

Closing accounting books involves summing up to calculate the total debit and credit occurrences and the end-of-period balance of each accounting account or the total income, expenditure, fund balance, inventory, and stock.

a) Period of closing accounting books

- The cash ledger must be closed at the end of each day. After closing, a reconciliation must be conducted between the cash ledger of the accountant and the cash fund ledger of the cashier, as well as with the actual cash in the safe to ensure accuracy and agreement. At the end of the month, a Cash Fund Inventory List must be prepared. After inventorying, the Cash Fund Inventory List is kept together with the last day's cash accounting ledger of the month.

- The bank deposit ledger and treasury deposit ledger must be closed at the end of the month for reconciliation with the bank and treasury; the Bank and Treasury Reconciliation Statement (with confirmation from the bank and treasury) is kept together with the monthly bank deposit ledger and treasury deposit ledger.

- Accounting units must close their accounting ledgers at the end of the fiscal year before preparing financial statements.

- Additionally, accounting units must close their accounting ledgers in cases of unexpected inventory checks or other situations as prescribed by law.

b) Procedures for closing accounting ledgers

(1) For manual ledger entries:

Step 1: Checking and reconciling before closing the accounting ledger

- At the end of the accounting period, after all accounting vouchers generated during the period have been recorded in the accounting ledger, reconcile the figures on the accounting vouchers (if necessary) with the figures entered in the ledger, and reconcile the figures among related accounting ledgers to ensure consistency between the figures on the accounting vouchers and those entered in the ledger, and among the ledgers. Sum up the debit and credit entries on the General Ledger and detailed accounting ledgers.

- From the detailed accounting ledgers and cards, prepare a Detailed Summary Table for accounts that need to be recorded on multiple ledgers or pages.

- Sum up the debit and credit entries of all accounts on the General Ledger or Journal-General Ledger to ensure consistency and equality with the total entries. Then reconcile the figures on the General Ledger with those on the detailed accounting ledgers or Detailed Summary Tables, and between the figures of the accountant and the cashier, warehouse keeper. Once consistency is ensured, proceed to close the accounting ledger. In case of discrepancies, determine the cause and handle the discrepancies until they match.

Step 2: Closing the ledger

- When closing the ledger, draw a horizontal line under the last transaction entry of the accounting period. Then write "Total entries for the month" below the drawn line;

- Write the "Ending balance" (month, quarter, year) line next;

- Write the "Cumulative total entries for previous months" line starting from the beginning of the quarter;

- Write the "Total cumulative entries from the start of the year" line;

The "Ending balance" is calculated as follows:

After calculating the ending balance for each account, record the debit balance in the debit column and the credit balance in the credit column.

- Finally, draw two consecutive lines to conclude the closing process.

- For certain detailed ledgers structured with debit and credit columns and a "Balance" (or "Remaining", "Stock", "Leftover", "Income", "Expenditure", "Fund Balance"...), the balance figures (remaining or stock) are recorded in the "Ending balance" line of the "Balance" column or "Fund Balance" column, or "Remaining" column.

After closing the accounting ledger, the ledger keeper must sign below the two lines. The Chief Accountant or the person responsible for accounting must check for accuracy and balance and confirm by signing. Then submit to the Unit Head for review and approval to confirm the legal validity of the closed accounting ledger figures.

(2) For computerized ledger entries:

Establishing the closing procedure for accounting ledgers on accounting software must ensure and reflect the closing principles for manual accounting ledger entries.

8. Correcting accounting ledgers

a) Methods for correcting accounting ledgers: Implemented according to Clause 1 and Clause 4 of Article 27 of the Accounting Law.

b) Situations for correcting accounting ledgers for one (01) fiscal year

For journal entries already recorded in the fiscal year, budget year N, in case of errors or upon request from authorized agencies, the adjustment of figures is regulated as follows:

(1) From January 1, Year N to December 31, Year N:

During the period from January 1, Year N to before closing the accounting ledger on December 31, Year N, the current fiscal year's accounting ledger is corrected according to the method stipulated in paragraph a of Clause 8 of this Article.

For journal entries related to state budget settlement, simultaneously adjust the information on the detailed accounting ledger tracking the state budget to align with the corrected financial journal entries.

(2) From January 1, Year N + 1 to before submitting the financial report to the authorized government agency:

During the period from January 1, Year N + 1 to before submitting the financial report to the authorized government agency, the accounting ledger for the reported fiscal year is corrected according to the method stipulated in paragraph a of Clause 8 of this Article.

For journal entries related to state budget settlement, simultaneously adjust the information on the detailed accounting ledger tracking the reported state budget year to align with the corrected financial journal entries.

(3) After submitting the financial report to the authorized government agency:

- After submitting the financial report, for the accounting ledger of the discovered fiscal year, the accounting ledger is corrected according to the method stipulated in paragraph a of Clause 8 of this Article, and explained in the financial report.

- For journal entries related to state budget settlement:

+ If the state budget settlement report has not been approved, simultaneously adjust the information on the detailed accounting ledger tracking the reported state budget year.

+ If the state budget settlement report has been approved, simultaneously adjust the information on the detailed accounting ledger tracking the discovered state budget year and explain it in the state budget settlement report.

9. The list of accounting ledgers, ledger formats, and instructions for preparing accounting ledgers are set out in Appendix No. 03 attached to this Circular.

3. Amend Clause 3 Article 2 as follows:Article 6. Settlement Report

1. Entities subject to the preparation of a settlement report

Administrative and public service units using state budget funds must prepare a state budget settlement report for the portion of funds allocated by the state budget.

In cases where administrative and public service units generate revenues and expenditures from sources other than state budget funds, if there are regulations requiring settlement reports to be submitted to competent authorities as with state budget funds, they must prepare settlement reports for these sources.

2. Purpose of the Settlement Report

The state budget settlement report is used to compile the situation of receiving and using state budget funds by administrative and public service units, presented in detail according to the state budget structure to provide information to higher-level agencies, financial agencies, and other competent authorities. Information on the state budget settlement report serves to evaluate compliance with state budget laws and other financial mechanisms that the unit is responsible for implementing, serving as a crucial basis for government agencies, higher-level units, and unit leadership to monitor, assess, supervise, and manage financial and budgetary activities of the unit.

The settlement report for other sources reflects the revenue and expenditure situation of administrative and public service units from sources other than the state budget (as required by law to settle accounts with higher-level agencies, financial agencies, and other competent authorities). Information on the settlement report for other sources serves to evaluate the implementation of financial mechanisms applied by the unit, serving as a crucial basis for higher-level agencies, financial agencies, other competent authorities, and unit leadership to assess the effectiveness of policies applied to the unit.

3. Principles and Requirements for Preparing and Presenting Settlement Reports

a) Principles:

- Settlement reports must be based on accounting records after closing the books.

- For state budget settlement reports:

+ The state budget settlement amount includes the funds received and used from the state budget during the year, including any adjustments made during the settlement period as prescribed by state budget laws.

+ The state budget settlement figures of the unit must be reconciled and confirmed by the State Treasury where transactions take place.

+ The state budget expenditure settlement amount is the actual expenditure, supported by complete documentation, except for expenditures that require recording in the state budget, which can only be settled after confirmation procedures have been completed by the competent authority.

- For settlement reports for other sources: The settlement figures include revenues and expenditures from sources other than the state budget that the unit has implemented from the beginning of the year until December 31st each year.

b) Requirements:

Settlement reports must ensure honesty, objectivity, completeness, timeliness, and accurately reflect the revenue and expenditure situation for each source of funding of administrative and public service units.

Settlement reports must be prepared in accordance with the content and methods specified and consistently presented across reporting periods. The indicators in the state budget settlement report system must align and be consistent with the annual budget estimates assigned by the competent authority and the state budget structure, ensuring comparability between actual performance and budget estimates and among different accounting periods.

If the state budget settlement report contains content and presentation methods different from those in the budget estimates or from the previous year's accounting period report, explanations must be provided in the explanatory section of the annual settlement report.

4. Reporting Periods

State budget settlement reports and settlement reports for other sources are prepared annually according to the accounting period.

Annual state budget settlement report data includes revenues and expenditures within the fiscal year of administrative and public service units, calculated up to the end of the state budget settlement adjustment period (January 31st of the following year) as stipulated by state budget laws.

Settlement report data includes revenues and expenditures from other sources of administrative and public service units, calculated up to the end of the annual accounting period (December 31st).

If laws require additional settlement reports for other accounting periods, in addition to the annual settlement report, the unit must also prepare reports for those periods.

5. Responsibilities of Units in Preparing and Submitting Settlement Reports

a) Responsibilities of the Unit:

Administrative and public service units must prepare and submit state budget settlement reports, in addition to the settlement report forms prescribed in this Circular, they must also prepare other forms required for state budget settlement work and other management requirements under state budget laws.

Administrative and public service units generating revenues and expenditures from sources other than the state budget, as required by law to settle accounts with higher-level agencies, financial agencies, and other competent authorities, must prepare and submit settlement reports for other sources according to this Circular.

Administrative and public service units acting as higher-level units must aggregate the annual settlement reports of subordinate units as currently prescribed.

b) Responsibilities of Financial Agencies and State Treasury:

Financial agencies, State Treasury, and related units are responsible for implementing and coordinating in the verification, reconciliation, adjustment, provision, and utilization of data on funds and fund usage, asset management and use, and other activities related to state budget revenue and expenditure situations and specialized business operations of administrative and public service units.

6. Content and Deadline for Submitting Annual Settlement Reports

a) Content:

Administrative and public service units submit reports to their higher-level budget units or the same-level financial agency (in cases without a higher-level budget unit), including:

- Annual settlement reports as prescribed in this Circular.

- Comparison forms for budget allocations withdrawn at the State Treasury, provisional advance payment and provisional payment settlement situations at the State Treasury, and balance reconciliation statements for deposit accounts at the State Treasury as stipulated in Circular No. 61/2014/TT-BTC dated May 12, 2014, of the Ministry of Finance and related amendments and supplements (if applicable).

||| - Other reports as prescribed by the competent authority to serve the finalization of the state budget.

||| b) The deadline for submitting the annual finalization report of administrative and public service units using state budget funds shall be implemented in accordance with the State Budget Law and other guiding legal documents on the state budget.

||| 7. List of reports, templates, explanations of methods for preparing the finalization report on the state budget as set out in Appendix No. 04 attached hereto.

Article 7||| Financial Report

1. Subjects preparing financial reports

After the end of the annual accounting period, administrative and public service units must close their books and prepare financial reports to submit to the competent authorities and related units as prescribed.

||| 2. Purpose of the financial report

The financial report is used to provide information about the financial situation, financial results, and cash flows from the unit's activities, providing relevant persons to review and make decisions regarding the unit's financial and budgetary activities. Information from the financial report helps improve the unit's accountability for receiving and using resources in accordance with the law.

Financial information of administrative and public service units serves as the basis for consolidating the financial reports of higher-level units.

3. Principles and requirements for preparing financial reports

a) Principles:

The preparation of financial reports must be based on accounting data after closing the books. Financial reports must be prepared in accordance with the principles, contents, and methods prescribed and presented consistently across accounting periods; if financial reports are presented differently across accounting periods, the reasons must be clearly explained.

Financial reports must bear the signatures of the preparer, the chief accountant, and the head of the accounting unit. Those signing the financial report are responsible for its contents.

b) Requirements:

Financial reports must reflect truthfully and objectively the content and value of the reported indicators; they should be presented in a structured and systematic manner regarding the financial situation, operational results, and cash flows from the unit's activities.

Financial reports must be prepared promptly within the timeframes specified for each type of unit, clearly and accurately presenting information and accounting data.

Thông tin, số liệu báo cáo phải được phản ánh liên tục, số liệu của kỳ này phải kế tiếp số liệu của kỳ trước.

||| 4. Period for preparing the financial report

Units must prepare the financial report at the end of the annual accounting period as prescribed by the Accounting Law.

||| 5. Responsibilities of units in preparing financial reports

a) Administrative and public service units must prepare the annual financial report according to the forms issued in this Circular; in cases where administrative and public service units have special operations, they may present the report according to the accounting system issued specifically by the Ministry of Finance or approved.

b) Administrative and public service units must prepare financial reports according to complete forms, except for the following accounting units that may choose to prepare simplified financial reports:

(1) For state agencies meeting the following conditions:

- Departments or equivalent offices under the People's Committee of districts, which are only allocated regular state budget expenditures;

- Not allocated state budget expenditures for investment development or from foreign sources; not allocated revenue, expense, or fee budgets;

- Have no subordinate agencies or units.

(2) For public service units meeting the following conditions:

- Public service units classified by the competent authority as those fully funded by the state budget for regular expenditures (based on functions and tasks assigned by the competent authority without any income or low income);

- Not allocated state budget expenditures for investment development or from foreign sources; not allocated revenue, expense, or fee budgets;

- Have no subordinate units.

c) Higher-level accounting units with subordinate units that are not accounting units must prepare consolidated financial reports including their own data and all financial information of subordinate units, ensuring that all data arising from internal transactions between the higher-level unit and subordinate units and among subordinate units themselves are excluded (subordinate units involved in internal settlement relationships are dependent accounting units that only submit financial reports to the higher-level unit for consolidation (merger) of data and do not need to submit reports to external authorities).

||| 6. Content and deadlines for submitting financial reports

a) Content:

Administrative and public service units must submit annual financial reports to higher-level accounting units or state authorities in accordance with this Circular.

b) Deadline for submitting financial statements:

Annual financial reports of administrative and public service units must be submitted to state authorities or higher-level units within ninety days from the end of the annual accounting period as prescribed by law.

||| 7. Disclosure of financial reports

Financial reports are disclosed in accordance with the Accounting Law and related legal documents.

8. List of reports, templates, explanations of methods for preparing simplified financial reports and comprehensive financial reports as set out in Appendix No. 04 attached hereto.

Chapter III

IMPLEMENTATION

Article 8. Effective Date

1. This Circular takes effect forty-five days from the date of signature and applies from January 1, 2018.

2. This Circular replaces Decision No. 19/2006/QD-BTC dated March 30, 2006 of the Ministry of Finance on the issuance of the Accounting System for Administrative and Public Service Units and Circular No. 185/2010/TT-BTC dated November 15, 2010 of the Ministry of Finance guiding amendments and supplements to the Accounting System for Administrative and Public Service Units issued together with Decision No. 19/2006/QD-BTC.

Article 9. Implementation Organization

1. Ministries, sectors, provincial People's Committees, and centrally-administered municipal People's Committees are responsible for directing and implementing this Circular to administrative and public service units under their jurisdiction or management.

2. Heads of the Department of Accounting Systems and Auditing, the Department of Administrative and Public Service Units, the Department of State Budget, the Director of the Ministry's Office, and heads of related units under the Ministry of Finance are responsible for disseminating, guiding, inspecting, and enforcing this Circular./.