Joint Circular No. 133/1998/TTLT/BTC-BGTVT guiding the financial management regime for state-owned enterprises operating public services in the road sector.

 

CIRCULAR

JOINT CIRCULAR MINISTRY OF FINANCE AND MINISTRY OF TRANSPORTATION

Guidelines for financial management of state-owned enterprises operating public services in the road sector

public works in the road sector

Pursuant to Decree No. 56/CP dated October 2, 1996 of the Government on state-owned enterprises operating public services;

Circular No. 06 TC/TCDN dated February 24, 1997 of the Ministry of Finance guiding the financial management regime for state-owned enterprises operating public services

Based on the characteristics of operations of state-owned enterprises operating public services in the field of road management and repair, the Ministry of Finance and Ministry of Transportation guide the financial management regime for state-owned enterprises operating public services in the road sector as follows:

This technical regulation sets out technical requirements, testing methods, sampling procedures; management requirements; responsibilities of organizations and individuals producing, trading, and importing cigarettes.

1. The subject of this Circular is state-owned enterprises operating public services in the field of road management and repair under the Vietnam Road Administration and local Departments of Transport and Public Works, established by competent authorities (referred to as Public Service Road Enterprises). The Vietnam Road Administration shall implement tasks assignment, sign contracts, place orders, supervise, inspect, and settle accounts for road bridge repair work volumes for central-managed Public Service Road Enterprises. Local Departments of Transport and Public Works shall implement tasks assignment, sign contracts, place orders, supervise, inspect, and settle accounts for road bridge repair work volumes for locally-managed Public Service Road Enterprises.

2. Public Service Road Enterprises are responsible for using the capital and resources allocated by the State to perform the following tasks:

+ Managing and repairing road bridge infrastructure;

+ Managing and collecting fees for road bridges;

+ Organizing river crossing services and collecting ferry fares on the road system;

+ Producing, installing, and repairing structures, equipment, and means to ensure road traffic safety.

3. In addition to assigned public service tasks, Public Service Road Enterprises have the right to utilize land, capital, and assets managed by the enterprise and raise additional capital to organize appropriate business activities in accordance with the enterprise's capacity and market demand provided that:

- Approval by the authority deciding on enterprise establishment in writing;

- It does not affect the performance of assigned public service tasks;

- Registration of supplementary business activities according to current regulations;

- Separate accounting for non-public service business activities;

- It fulfills all tax obligations for additional business activities according to the law.

4. Public Service Road Enterprises implement tax policies and state budget revenues according to Circular No. 32/1998/TT-BTC dated March 17, 1998, guiding the implementation of tax policies and state budget revenues for state-owned enterprises operating public services.

5. Public Service Road Enterprises are subject to financial supervision and inspection by the finance authority as the representative of the State owner regarding capital and assets at the enterprise according to the Government's authorization.

II. MANAGEMENT AND USE OF CAPITAL AND ASSETS

1. Capital Investment:

1.1. Public Service Road Enterprises are invested by the State with initial registered capital not less than the statutory minimum capital prescribed by the State to build, purchase fixed assets, and circulating assets suitable for the scale and assigned tasks.

1.2. Public Service Road Enterprises currently in operation, if lacking capital compared to the tasks assigned by the State (after mobilizing existing capital within the unit), will be supplemented by the State as follows:

- In case of profitable operations: Eligible for tax reduction to supplement capital according to the law;

- In case of non-profitable operations or already eligible for tax reduction but still insufficient capital, the State will consider supplementary investment to meet the required capital.

1.3. Procedures and processes for capital investment in construction and circulating capital for Public Service Road Enterprises are carried out according to current laws.

2. Capital Mobilization:

2.1. Public Service Road Enterprises have the right to mobilize capital through various forms to develop business activities according to the law, but must not change the form of ownership of the enterprise.

The enterprise must prepare a capital mobilization plan for each specific case to submit to the establishment decision-making body and the finance authority. After reaching agreement with the finance authority, the establishment decision-making body decides to implement it.

2.2. In cases of organizing business activities outside assigned tasks, Public Service Road Enterprises are permitted to borrow from credit organizations (commercial banks, financial companies, etc.), other enterprises, individuals (including employees within the enterprise) to supplement operational capital but must comply with legal regulations.

2.3. The interest rate on mobilized capital must be recorded in production and service costs and cannot exceed the maximum lending rate announced by the State Bank of Vietnam at the time of capital mobilization for each industry.

2.4. When mobilizing capital, the enterprise must carefully calculate economic efficiency, ensuring the proper and effective use of mobilized capital and not using short-term loans for long-term investments.

The enterprise must repay principal and interest according to the agreed terms when mobilizing capital.

The enterprise must organize separate accounting for capital mobilized for public service activities, capital for business activities, and allocate costs separately for each type to determine the effectiveness of each type of activity.

The Director of Public Service Road Enterprises is responsible to the State for improper and ineffective use of capital leading to losses.

3. Investment outside the enterprise:

3.1. When there is a need to use capital, assets, or land value rights to invest outside the enterprise, Public Service Road Enterprises must prepare a capital contribution plan or explain joint venture projects to the establishment decision-making body and the finance authority. After reaching agreement with the finance authority, the establishment decision-making body decides to implement it.

3.2. Investment of capital outside the enterprise shall not affect the assigned public service tasks, must comply with legal regulations, ensure efficiency, preservation, and development of capital, and increase income. When using the value of land use rights to invest outside the enterprise, the provisions of the Land Law must be implemented.

3.3. The Public Service Road Enterprise shall not use state-invested capital for monetary business such as purchasing bonds, bills, savings deposits...

3.4. The Public Service Road Enterprise shall not be permitted to invest in enterprises not owned by the state where the manager, operator, or principal owner is the spouse, parent, or child of the General Director of the Public Service Road Enterprise.

4. The Public Service Road Enterprise shall be responsible for maintaining accounting books to accurately track all current assets and capital according to the accounting system; truthfully and promptly reflect changes in assets and capital during operations.

5. Transfer, liquidation, leasing, mortgaging, pledging of assets

5.1. The Public Service Road Enterprise may sell and liquidate unused or obsolete technical assets to recover capital for more effective business purposes.

When selling or liquidating assets, the enterprise must establish a Technical Evaluation Council to assess the asset's value and organize auctions in accordance with the law. The difference between the proceeds from the sale or liquidation and the remaining book value, along with the costs of sale and liquidation, shall be accounted for in the business results. The recovered remaining value from the sale or liquidation of state-owned assets shall be included in the enterprise's reinvestment capital.

5.2. The transfer, leasing, mortgaging, pledging of assets generally, and the liquidation of major machinery and equipment essential to the operation of the Public Service Road Enterprise must be approved by the agency that established the enterprise after reaching a written agreement with the financial authority.

The liquidation of other assets shall be carried out in accordance with the regulations for state enterprises engaged in business activities.

5.3. Assets leased for operation to enhance utilization efficiency and increase income, the Public Service Road Enterprise must still accrue depreciation according to regulations, monitor, and recover the assets upon lease expiration.

5.4. Assets pledged or mortgaged to borrow funds from credit organizations must be conducted in accordance with the prescribed procedures and formalities under the law.

The Public Service Road Enterprise shall not pledge, mortgage, or lease borrowed, rented, held in custody, or pledged assets from other enterprises without the consent of the owners of those assets.

6. Capital allocation, responsibility for capital preservation, revaluation of assets, handling plans for asset losses, management of receivables and payables shall be implemented as stipulated for state enterprises engaged in production and business activities.

7. Depreciation accrual and use of fixed assets.

The Public Service Road Enterprise shall implement the management, use, and depreciation accrual system for fixed assets issued pursuant to Decision No. 1062/TC/QĐ/CSTC dated November 14, 1996, by the Minister of Finance, and Circular No. 24/1998/TT-BTC dated February 26, 1998, by the Ministry of Finance on guiding the management and use of reinvestment capital in state enterprises.

III. PRODUCTION - TECHNICAL - FINANCIAL PLAN, FINANCIAL RESULTS AND HANDLING OF FINANCIAL RESULTS OF THE PUBLIC SERVICE ROAD ENTERPRISE

A. PRODUCTION - TECHNICAL - FINANCIAL PLAN

Annually, based on assigned tasks and financial guidance from the financial authority, the Public Service Road Enterprise shall prepare production plans, financial income and expenditure budgets, subsidy forecasts, report to the establishment decision-making body and the same-level financial authority. The establishment decision-making body is responsible for approving, consolidating reports to the financial authority and related agencies.

Within the financial plan and approved annual subsidy and price support budget forecast, the head of the establishment decision-making body assigns plans to public service road enterprises and sends them to the same-level financial authority for coordination.

B. FINANCIAL RESULTS

1. Revenue of the Public Service Road Enterprise includes: revenue from public service activities, revenue from business activities, and other activities.

Revenue from public service road activities includes:

+ Revenue from managing and repairing bridge and road construction projects is the completed value of the managed and repaired quantities of bridge and road construction projects;

+ Revenue from producing, installing, and repairing traffic safety structures and equipment is the completed value of products and services handed over;

+ Revenue from ferrying activities is the fare collected from passengers and transport vehicles crossing the river;

+ Revenue from toll collection on bridges and roads is the toll revenue from bridges and roads enjoyed according to the regulations of the State as stipulated in Circular No. 57/1998/TT-BTC dated April 27, 1998, of the Ministry of Finance regarding the guidelines for the collection of bridge and road tolls by the State.

2. Costs of the Public Service Road Enterprise include: costs of public service activities, business activities, and other activities.

Contents of public service road activity costs include:

2.1. Raw material, material, fuel, energy costs used in public service activities;

2.2. Wages, salaries, meal allowances during work shifts, and other items with wage and salary nature according to the prescribed regime;

2.3. Depreciation costs of fixed assets, subject to and level of accrual implemented according to Decision No. 1062/TC/QĐ/CSTC dated November 14, 1996, of the Ministry of Finance;

2.4. Research and development costs, scientific and technological innovation, educational and health funding, labor training according to the prescribed regime;

2.5. External service costs: electricity, water, telephone, fixed asset repair; rental fees for fixed assets, auditing; insurance for assets; payment for technical documentation usage, patents, technology licenses not included in fixed assets; technical services; advertising and safety reminders.

2.6. Expenditures for female workers as prescribed by law, expenditures for labor protection, expenditures for protecting business premises, contributions to social insurance funds, health insurance funds, trade union fees, and amounts set aside to form management cost sources for higher levels (if any);

2.7. Management expenses:

+ Interest payments on loans for bank operations and other entities;

+ Provisions as prescribed by regulations;

+ Severance pay for employees;

+ Payment of taxes, fees, and land rental fees;

+ Administrative management expenses: Purchase of office equipment, stationery; printing costs for documents, receipts, ferry tickets, bridge and road tolls;

+ Travel expenses, conference fees, ceremonial events, transactions, foreign affairs...;

The aforementioned expenses must be carried out with a spirit of thrift, in compliance with price regimes and expense standards (if any), and must be supported by valid invoices and documents according to current regulations.

3. Revenue and expenses from business activities and other activities shall be determined according to current regulations applicable to state-owned enterprises engaged in production and business operations.

4. Public service enterprises on roads may use revenue to offset expenses, including:

Revenue from public service activities is used to offset public service activity expenses and other revenues as prescribed by law (excluding income tax);

Revenue from business activities and other activities is used to offset business activity expenses and other activities, taxes, and other revenues of the State as prescribed by law (excluding income tax).

Public service enterprises on roads must ensure profitability in their business operations in principle, and they are not allowed to use profits from public service activities to cover losses in business activities.

C. DISPOSITION OF FINANCIAL RESULTS

The results of business operations of Public Service Enterprises on Roads include:

1. Public service activities section

a) Enterprises only responsible for managing and collecting fees for bridges and roads: Implemented according to Circular No. 57/1998/TT-BTC dated April 27, 1998, and Circular No. 75/1998/TT-BTC dated June 2, 1998, issued by the Ministry of Finance.

b) Enterprises perform the following tasks:

+ Managing and repairing road bridges;

+ Producing, installing, and repairing facilities and equipment serving road traffic safety;

+ Organizing river crossings and managing facilities and means serving river crossings.

Profits realized in the year (including both business and other activities' profits) are distributed as follows:

+ Paying income tax as prescribed by law;

+ Deducting fines for violating financial discipline, contract breaches, overdue payment penalties, and legitimate expenses not deducted when determining taxable profit;

+ Deducting losses not deducted from pre-tax profit;

+ The remaining profit after deducting the above items, the enterprise is entitled to establish funds at the following rates and limits:

- Development investment fund: minimum extraction rate of 50%;

- Financial reserve fund: extract 10%, the maximum balance of this fund shall not exceed 25% of the registered capital;

- Extract two reward and welfare funds up to a maximum of three months' actual salary if the annual tax payment exceeds the previous year, and two months' actual salary if the annual tax payment is equal to or lower than the previous year.

After establishing the development investment fund, the financial reserve fund, and the reward and welfare funds, if there is any remaining profit, it will be fully transferred to the development investment fund; if the remaining profit is insufficient to establish the reward and welfare funds at two months' actual salary, the State will provide the shortfall.

c) Enterprises that manage, maintain, and repair bridges and roads while also managing and collecting fees for bridges and roads: Financial results are handled as prescribed for enterprises under point (b). However, the management and use of fees collected for bridges and roads must be recorded separately and implemented as prescribed for enterprises under point (a).

2. Business activities section

Profits from business activities and other activities are distributed as follows:

+ Pay taxes as prescribed by law;

+ Post-tax profits are distributed according to the regime prescribed for state-owned enterprises engaged in business activities, but the total amount extracted for each fund from all sources (including public service activities) shall not exceed the maximum limit prescribed for state-owned enterprises engaged in business activities.

Procedures, timing for establishing funds, and purposes of using funds are implemented as prescribed for state-owned enterprises engaged in production and business activities.

IV. ACCOUNTING AUDITS, FINANCIAL REPORTS, AND FINANCIAL TRANSPARENCY

1. Preparing financial reports.

Quarterly and annually, public service enterprises on roads are responsible for preparing financial statements according to current regulations. The enterprise director is responsible before the State and the law for the accuracy and truthfulness of the financial statements.

Quarterly and annual financial statements must be submitted to the agency deciding the establishment of the enterprise, the financial agency (State Capital and Asset Management at the Enterprise), the Tax Agency, and the Statistical Agency.

2. Accounting inspection, financial statement review

Public service enterprises on roads conduct quarterly and annual accounting inspections and financial statement reviews.

The agency deciding the establishment of the enterprise, together with the financial agency, organizes the review and approval of the annual financial statements of public service enterprises on roads.

The financial agency has the responsibility to inspect compliance with financial systems, accounting, and budgetary discipline of public service enterprises on roads.

Violations of accounting systems, financial income and expenditure systems, budgetary payments, and fund establishment and usage systems will be subject to administrative and economic penalties as prescribed by law.

3. Public disclosure of annual financial statements.

Based on the annual financial statements approved by the competent authority, public service enterprises on roads publicly disclose certain financial indicators before the meeting of workers and staff of the enterprise.

The content of the disclosed indicators follows the model attached to this Circular.

V. IMPLEMENTATION PROVISIONS

1. In addition to the provisions mentioned above, public service enterprises on roads have the obligation to comply with all other legal provisions applicable to state-owned enterprises.

2. This Circular shall take effect fifteen days from the date of issuance and shall apply to public utility road enterprises established in 1997 and 1998. All previous regulations contrary to this Circular shall be abolished.

3. In the course of implementation, any difficulties should be promptly reported by public utility road enterprises to the Ministry of Transport and the Ministry of Finance for study and appropriate amendment.

 

SOCIALIST REPUBLIC OF VIETNAM

Independence - Freedom - Happiness

Date...Month...Year 199...

NOTICE OF PUBLIC ANNOUNCEMENT OF ANNUAL FINANCIAL REPORT

Unit of account: VND

The enterprise is responsible for the accuracy and truthfulness of this report.

Credit organization branch in province/city and basic credit cooperative…

Signature, stamp