Circular No. 132/2015/TT-BTC guides the financial management mechanism for the Vietnam Environment Protection Fund.

CIRCULAR

Guidelines for financial management mechanisms for the Vietnam Environment Protection Fund

Pursuant to the Law on Environmental Protection dated June 23, 2014;

Pursuant to Decree No. 215/2013/NĐ-CP dated November 23, 2013 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance;

Pursuant to Decision No. 78/2014/QĐ-TTg dated December 26, 2014 of the Prime Minister on the organization and operation of the Vietnam Environment Protection Fund;

Considering the proposal of the Director of the Department of Financial Institutions and Financial Organizations;

The Minister of Finance issues this Circular guiding the financial management mechanisms for the Vietnam Environment Protection Fund.

PART I
GENERAL PROVISIONS

Article 1. Scope of Regulation

This Circular guides the financial management mechanisms for the Vietnam Environment Protection Fund organized and operated according to Decision No. 78/2014/QĐ-TTg dated December 26, 2014 of the Prime Minister on the organization and operation of the Vietnam Environment Protection Fund (hereinafter referred to as Decision No. 78/2014/QĐ-TTg).

Article 2. Applicability

Article 1. Vietnam Environment Protection Fund (hereinafter referred to as the Fund).

2. Relevant agencies, organizations, and individuals.

Article 3. Principles of financial management

1. The Fund is a state financial organization under the Ministry of Natural Resources and Environment, operating without profit-making objectives but must preserve the subscribed capital and self-cover administrative expenses, exempted from tax and other budget contributions for activities in the field of environmental protection as prescribed by laws on taxation and laws on the State budget.

2. The Fund operates openly, transparently, and equally as prescribed by law.

3. The Fund is subject to inspection, audit, and financial supervision by relevant state management agencies and the National Audit Office regarding its financial activities.

Article 4. Liability Regime

The Management Board, Supervisory Board, and Director of the Vietnam Environment Protection Fund are liable under the law and to state management agencies for the safekeeping of the Fund's capital and assets, ensuring their proper, economical, and effective use, and compliance with financial management, accounting, and auditing regulations.

Chapter II
PROVISIONS ON CAPITAL AND ASSETS

Section 1
MANAGEMENT OF THE FUND'S CAPITAL AND USE OF CAPITAL

Article 5. Sources of Operating Capital of the Vietnam Environment Protection Fund

The operating capital of the Vietnam Environment Protection Fund is formed from the following sources:

1. Subscribed Capital

a) The subscribed capital of the Vietnam Environment Protection Fund until 2017 is 1,000 (one thousand) billion VND. The schedule for additional subscribed capital supplementation for the Vietnam Environment Protection Fund shall be implemented as stipulated in Clause 1, Article 7 of Decision No. 78/2014/QĐ-TTg;

b) The subscribed capital of the Vietnam Environment Protection Fund is supplemented from the following sources:

- State budget allocation as prescribed by law;

- Development fund.

2. Additional annual operating capital from the following sources:

a) State budget expenditure on environmental affairs compensating funding for environmental protection projects and tasks completed annually and supplementing the Fund's operating capital;

b) Compensation payments for environmental damage and biodiversity loss remitted to the state budget as prescribed by law;

c) Fees from the sale and transfer of certified emission reduction certificates (CERs) obtained from Clean Development Mechanism projects implemented in Vietnam;

d) Donations, grants, voluntary contributions, and entrusted investments from organizations and individuals both domestically and internationally dedicated to environmental protection and climate change response;

đ) Annual surplus from revenue and expenditure as stipulated at point a, Clause 1, Article 15 of this Circular;

e) Other lawful sources of capital as prescribed by law.

Article 6. Use of Capital

The VN Environmental Protection Fund shall use its capital for the following purposes:

1. Providing loans with preferential interest rates to environmental protection projects nationwide.

2. Supporting interest rates on loans for environmental protection projects that borrow from financial institutions in accordance with the provisions of the law.

3. Financing, co-financing environmental protection activities in accordance with the provisions of the law and not overlapping with state budget funds allocated to ministries, sectors, and localities for environmental protection activities.

4. Implementing certain financial mechanisms and policies for investment projects under the Clean Development Mechanism (CDM), including:

a) Organizing, monitoring, managing, and collecting fees for the sale of certified emission reduction certificates (CERs) issued by the international executive board of the CDM for CDM projects implemented in Vietnam;

b) Supporting dissemination and promotional activities to raise awareness about CDM projects; reviewing and approving CDM project documentation; managing and supervising CDM projects;

c) Subsidizing products from CDM projects.

5. Supporting electricity prices for grid-connected wind power projects in accordance with the Prime Minister's Decision and current legal regulations.

6. Financial support for climate change response activities in accordance with the provisions of the law.

7. Implementing programs, projects, tasks assigned by the Prime Minister and the Minister of Natural Resources and Environment in accordance with the provisions of the law.

8. Investing in basic construction and purchasing fixed assets to serve the operations of the VN Environmental Protection Fund.

9. Using idle capital to deposit at commercial banks with good operational quality classified by the State Bank of Vietnam for the purpose of preserving and developing the Fund's capital while ensuring safety. The Management Board of the VN Environmental Protection Fund promulgates regulations on the management and investment of idle capital at commercial banks for the Fund to implement.

Article 7. Ensuring Capital Safety

1. The VN Environmental Protection Fund is responsible for implementing regulations on ensuring the safety of operating capital, including:

a) Managing and using capital for intended purposes effectively;

b) Purchasing insurance for assets and other insurances as prescribed by law;

c) Establishing a risk reserve fund for lending activities in accordance with guidelines for business operations of the Fund;

d) Implementing other measures to ensure capital safety as prescribed by law.

2. Strictly prohibited for the VN Environmental Protection Fund:

a) Raising capital through deposit-taking, issuing bills, bonds, commercial loans from organizations and individuals both domestically and internationally;

b) Using operational capital for monetary business purposes, securities investment, real estate business, and other unauthorized business activities.

Section 2
ASSET MANAGEMENT

Article 8. Investment in Fixed Assets

1. Investments and purchases of fixed assets to serve the operations of the VN Environmental Protection Fund shall be carried out according to the principle that the remaining value of total fixed assets does not exceed 10% of the actual paid-up capital of the VN Environmental Protection Fund at the time of purchase.

2. Annually, the VN Environmental Protection Fund must develop an investment and procurement plan for fixed assets to submit to the Management Board for review and approval. Investment and procurement of fixed assets to serve the operations of the VN Environmental Protection Fund shall be decided by the Director of the Fund in accordance with the annual plan already developed.

3. The procedures and processes for investment and procurement of fixed assets by the VN Environmental Protection Fund shall be carried out in accordance with the laws on investment and procurement of fixed assets and current regulations applicable to state-owned enterprises holding 100% of the capital. The VN Environmental Protection Fund is responsible for purchasing asset insurance as prescribed by law.

4. The VN Environmental Protection Fund shall implement depreciation of fixed assets in accordance with current regulations applicable to state-owned enterprises holding 100% of the capital.

Article 9. Inventory, Revaluation, Liquidation, and Sale of Assets

1. Inventory of Assets

The VN Environmental Protection Fund shall conduct asset inventory in accordance with the provisions of the law for state-owned enterprises holding 100% of the charter capital. For excess or missing assets, the causes must be clearly identified, the responsibilities of those involved determined, and material compensation levels established according to the regulations.

2. Revaluation of Assets

The VN Environmental Protection Fund must conduct asset revaluation in accordance with the provisions of the law for state-owned enterprises holding 100% of the charter capital. Any increases or decreases in value resulting from asset revaluation shall be handled according to specific regulations for each case.

3. Liquidation and Sale of Assets

a) The VN Environmental Protection Fund has the right to liquidate and sell assets that are substandard, deteriorated, or irreparable; obsolete technical assets not needed or not effectively utilized to recover capital, following principles of transparency, preservation of capital, and compliance with the law for state-owned enterprises holding 100% of the charter capital;

b) Authority to Decide on the Liquidation and Sale of Fixed Assets:

- The Management Board of the VN Environmental Protection Fund decides on plans to liquidate or sell fixed assets with remaining values under 50% of the actual charter capital of the VN Environmental Protection Fund published in the most recent quarter but not exceeding the scale level B project. The Management Board may delegate authority to the Director of the VN Environmental Protection Fund to decide on selling or liquidating assets within its jurisdiction;

- Plans to liquidate or sell fixed assets with values greater than the delegated level to the Management Board shall be decided by the Minister of Natural Resources and Environment.

Article 10. Handling Losses of Assets

When suffering asset losses, the VN Environmental Protection Fund must determine the value of the lost assets, the causes, responsibilities, and handle them as follows:

1. Clearly identify both objective reasons (natural disasters, epidemics, fires, unexpected accidents, political risks) and subjective reasons.

2. If due to subjective reasons, the organization or individual causing the loss must compensate and be dealt with according to the law. The Management Board of the VN Environmental Protection Fund decides or delegates the Director of the Fund to decide on the compensation amount according to the law and bears responsibility for their decision.

3. If the asset was insured, it shall be handled according to insurance laws.

4. The value of the lost asset, after compensating for losses caused by the organization or individual responsible for the loss, the insurance organization, and using reserves, shall be recorded as expenses for the period.

5. In special cases where natural disasters or force majeure cause severe damage that the Fund cannot self-recover, the Director of the Fund reports to the Management Board a plan to handle the loss for approval by the Minister of Natural Resources and Environment.

Chapter III
MANAGEMENT OF REVENUE, EXPENSES, AND OPERATING RESULTS

Article 11. Revenue of the VN Environmental Protection Fund

The revenue of the VN Environmental Protection Fund includes receivables generated during the period, including:

1. Revenue from business operations:

a) Interest income from loans made by the VN Environmental Protection Fund projects;

b) Service fees from entrusted loan and sponsorship activities of domestic and foreign organizations and individuals according to entrustment contracts;

c) Other business activity income.

2. Revenue from financial activities:

a) Interest from deposits;

b) Other financial income.

3. Other revenues:

a) Income from the sale and liquidation of fixed assets of the VN Environmental Protection Fund;

b) Insurance compensation for asset losses;

c) Recovery of previously written-off debts;

d) Other income as prescribed by law.

Article 12. Expenses of the VNEMF Fund

The expenses of the VNEMF Fund are the necessary costs incurred during the period for the operation of the VNEMF Fund, complying with the principle of appropriateness between revenue and expenditure, having valid invoices and documents as prescribed by law, including:

1. Business operation costs:

a) Expenses related to lending activities and entrusted management;

b) Provision expenses for risks associated with lending activities according to the guidelines on business operations of the Fund;

c) Payment of interest on environmental recovery guarantees in mineral extraction and import waste assurance;

d) Expenses for other business operations.

2. Financial activity expenses: Including expenses related to depositing funds at commercial banks and other expenses.

3. Expenses for staff: Implemented according to the state regulations for enterprises wholly owned by the state:

a) Wages, allowances, remuneration, meal allowances, and other expenses of a wage nature payable to the staff of the VNEMF Fund as prescribed by law;

b) Allowances for members of the Management Board and Supervisory Board of the VNEMF Fund as prescribed by law;

c) Contributions to social insurance, health insurance, trade union fees, unemployment insurance;

d) Medical expenses; expenses for female workers as currently prescribed; labor protection expenses, transaction attire expenses; security expenses for the agency;

đ) Other expenses for staff as prescribed by law.

4. Management expenses of the VNEMF Fund

a) Depreciation expenses of fixed assets as prescribed by law; rental of fixed assets; insurance expenses for assets; repair and maintenance expenses for assets; expenses for renting and purchasing tools, equipment, office supplies serving the operations of the VNEMF Fund; expenses for compensating asset losses as prescribed;

b) Outsourced service expenses: Electricity, water, telephone, postal and telecommunications services; auditing, legal services; payment for technical materials, patents, technical services; transportation expenses; fire prevention and firefighting expenses;

c) Travel expenses, transportation allowances for staff of the VNEMF Fund traveling domestically and internationally according to state regulations for enterprises wholly owned by the state;

d) Transaction, external relations expenses, conference, ceremony expenses as prescribed by law;

đ) Other expenses as prescribed by law.

5. Other expenses:

a) Expenses for recovering written-off debts;

b) Expenses for collecting penalties as prescribed;

c) Support expenses for the activities of the Party and mass organizations of the VNEMF Fund as prescribed by the state (excluding support expenses for trade unions in industries, localities, social organizations, and other agencies);

d) Expenses for selling off and liquidating assets (if any), including the residual value of fixed assets sold off;

đ) Other expenses as prescribed by law.

6. Expense standards stipulated in Clause 1, 2, 3, 4, 5 of this Article shall be implemented according to the legal provisions for enterprises wholly owned by the state. In cases where there are no legal provisions, the VNEMF Fund shall base its expense standards on its financial capacity, ensuring appropriate and effective spending, and bear responsibility under the law. For expenses not in accordance with the system, and expenses exceeding the standard, the VNEMF Fund must record them outside the accounting books of the Fund, and at the same time clarify the responsibility of relevant organizations and individuals to submit to competent authorities for decision-making on compensation plans.

Article 13. Expenses that cannot be recorded as operating costs of the Vietnam Environmental Protection Fund (VEPF)

1. Expenditures exceeding the limits prescribed in Clause 6, Article 12 of this Circular.

2. Losses compensated by the State, insurance agencies, or the party causing the damage.

3. Penalties for administrative violations due to subjective reasons, and penalties for financial system violations.

4. Investment expenditures for basic construction, procurement, upgrading, and renovation of fixed assets from investment capital for basic construction.

5. Expenditures without valid and legal invoices or receipts.

6. Expenditures unrelated to the activities according to the functions of the Fund.

7. Expenditures covered by other funding sources.

Article 14. Revenue and expenditure differences

1. The revenue and expenditure difference of the Vietnam Environmental Protection Fund (VEPF) is the difference between total legitimate revenues and reasonable expenses incurred during the fiscal year as stipulated in Articles 11 and 12 of this Circular.

2. The revenue and expenditure difference in a year is positive (+) when revenues exceed expenses, and negative (-) when revenues are less than expenses.

Article 15. Distribution of revenue and expenditure differences

1. When the revenue and expenditure difference is positive (+), after paying fines for legal violations under the responsibility of the Vietnam Environmental Protection Fund (VEPF) and compensating for accumulated negative revenue and expenditure differences up to the previous year (if any), it will be distributed as follows:

a) Allocate 20% to the supplementary capital source of the Fund to fulfill support and sponsorship tasks. The Vietnam Environmental Protection Fund (VEPF) is responsible for recording and tracking this capital separately;

b) Allocate 30% to the development investment fund;

c) Allocate to the reward fund and welfare fund:

- In case the annual activity plan approved by the Management Board at the beginning of the year is completed, the Vietnam Environmental Protection Fund (VEPF) can allocate the maximum amount equal to three months' salary for the year;

- In case the annual activity plan approved annually by the Management Board is not completed, the Vietnam Environmental Protection Fund (VEPF) can allocate the maximum amount equal to two months' salary for the year.

d) The remaining amount after allocating to the above funds will be further allocated to the development investment fund.

2. When the revenue and expenditure difference in the fiscal year is negative (-), the Vietnam Environmental Protection Fund (VEPF) may transfer the deficit to the following year, with the transfer period not exceeding five years from the next consecutive year after the loss occurred. If the Vietnam Environmental Protection Fund (VEPF) has not transferred the entire deficit within five years, the Fund must report to the Ministry of Natural Resources and Environment to coordinate with the Ministry of Finance to submit to the Prime Minister for consideration and decision.

Article 16. Principles for using the funds

1. The development investment fund is used to supplement the registered capital of the Vietnam Environmental Protection Fund (VEPF).

2. The reward fund is used for:

a) Year-end bonuses or regular bonuses for staff of the Vietnam Environmental Protection Fund (VEPF);

b) Special bonuses for individuals or groups within the Vietnam Environmental Protection Fund (VEPF) who have innovative ideas improving technical processes or business procedures that enhance operational efficiency;

c) Bonuses for individuals or units outside the Vietnam Environmental Protection Fund (VEPF) who contribute effectively to the Fund's business operations and management work.

The Management Board of the Vietnam Environmental Protection Fund (VEPF) shall issue a reward regulation specifying the criteria for rewards, bonus amounts, and related matters for implementation by the Fund.

3. The welfare fund is used for:

a) Investing in constructing or repairing welfare facilities of the Vietnam Environmental Protection Fund (VEPF), contributing capital to joint welfare construction projects in the industry;

b) Funding public welfare activities for the collective staff, social welfare;

c) Providing emergency hardship assistance to staff, including retired and disabled staff of the Vietnam Environmental Protection Fund (VEPF).

d) Funding other welfare activities.

The use of the welfare fund is decided by the Director of the Vietnam Environmental Protection Fund (VEPF) after consulting with the Trade Union of the Vietnam Environmental Protection Fund (VEPF).

4. The use of these funds must be conducted openly in accordance with financial transparency regulations, grassroots democracy regulations, and state regulations.

Chapter IV
FINANCIAL PLAN, ACCOUNTING SYSTEM AND AUDIT FINANCIAL REPORTS

Section 1
FINANCIAL PLAN

Article 17. Financial Plan

1. Based on the strategy, orientation, and annual operation plan approved by the Ministry of Natural Resources and Environment, the VNEMF shall develop its annual financial plan for approval by the Management Board.

2. The annual financial plan of the VNEMF includes the basic contents prescribed in Appendix 1, Appendix 2, and Appendix 3 attached to this Circular.

3. The approval and issuance process of the VNEMF's annual financial plan:

a) The VNEMF shall prepare the next year’s financial plan, submit it for approval by the Management Board, and send it to the Ministry of Natural Resources and Environment before December 31 each year.

b) Before June 1 each year, the VNEMF shall submit the plan for using funds from environmental expenditure budgets for the following year for approval by the Management Board, send it to the Ministry of Natural Resources and Environment for consolidation, and then send it to the Ministry of Finance for review and decision by the competent authority.

Section 2
ACCOUNTING AND AUDIT SYSTEM FOR FINANCIAL REPORTS

Article 18. Accounting System

1. The VNEMF shall implement the accounting system in accordance with the laws on accounting and the guidance of the Ministry of Finance.

2. The fiscal year of the VNEMF starts on January 1 and ends on December 31 of the Gregorian calendar year.

1. At the end of each accounting period (quarterly, annually), the VNEMF must prepare, explain, and submit financial reports to the Ministry of Natural Resources and Environment and the Ministry of Finance in accordance with current laws.

2. Types of periodic quarterly and annual reports include:

a) Financial reports, including: Balance sheet, income statement, cash flow statement, explanatory notes to the financial statements; Revenue and expenditure report, situation of revenue and expenditure surplus distribution and fund usage, Report on financial assistance and support according to Appendices 4, 5, and 6 attached to this Circular;

b) Other reports: Loan situation report according to Appendix 7 attached to this Circular.

3. Audit of financial reports

a) The VNEMF's annual financial report must be audited by the state audit agency;

b) In cases where the state audit agency does not have plans to audit the VNEMF, the VNEMF's annual financial report must be audited by an independent auditing organization in accordance with the law.

4. The Chairman of the Management Board and the Director of the VNEMF are responsible for the accuracy and truthfulness of these reports.

5. Deadline for Submission of Reports:

a) Quarterly reports must be submitted no later than the 25th day of the first month of the quarter following the reporting period;

b) Annual reports must be submitted no later than March 30 of the following year.

6. The VNEMF has the responsibility to provide information and special reports as required by competent authorities in accordance with the law.

Article 20. Approval, Inspection, and Public Disclosure of Financial Reports

1. The VNEMF's annual financial report must be approved by the Ministry of Natural Resources and Environment. The VNEMF's annual financial report is sent to the Ministry of Finance for monitoring.

2. The Supervisory Board of the VNEMF organizes inspections and controls according to the plan on the implementation of the financial accounting system at the VNEMF and reports the inspection results to the VNEMF Management Board.

3. In case of necessity, the VNEMF shall be subject to financial inspection by the Ministry of Natural Resources and Environment, including:

a) Regular or special inspections of financial reports;

b) Special topic inspections based on financial management requirements.

4. Within 120 days from the end of the fiscal year, the VNEMF must publicly disclose financial reports in accordance with the law on accounting.

Chapter V
RESPONSIBILITIES OF THE AUTHORITIES

Article 21. Responsibilities of the Ministry of Finance

1. Implement the responsibilities stipulated in Clause 2, Article 8 of Decision No. 78/2014/QĐ-TTg.

2. Guide the accounting system suitable for the scale and specific nature of the VNEMF's operations.

3. Coordinate with the Ministry of Natural Resources and Environment to inspect and supervise the implementation of the financial management system of the VNEMF in accordance with the law.

Article 22. Responsibilities of the Fund

1. The VNEMF shall be responsible under the law for managing, using, and preserving the capital and assets of the State entrusted to it.

2. Adhere to financial management regulations stipulated in this Circular and related legal documents.

3. Annually, the VNEMF reports on the need for capital usage from environmental public service expenditure funds for the Ministry of Natural Resources and Environment to review, consolidate, and submit to the competent authority for approval.

4. Prepare annual final accounts report.

5. Be subject to management, inspection, and supervision by the Ministry of Natural Resources and Environment and other competent authorities as prescribed by current laws.

Chapter VI
IMPLEMENTATION

Article 23. Transitional Provisions

All balances of the funds (additional paid-in capital reserve fund, development investment fund) established according to Circular No. 93/2003/TT-BTC dated October 6, 2003, of the Ministry of Finance regarding the implementation of financial management regulations for the VNEMF up to the date this Circular takes effect shall be used to supplement the paid-in capital of the VNEMF.

Article 24. Effective Date

This Circular takes effect from January 1, 2016, and replaces Circular No. 93/2003/TT-BTC dated October 6, 2003, of the Ministry of Finance guiding the implementation of financial management regulations for the VNEMF.