Circular No. 155/1998/TT-BTC supplements certain points in Circular No. 60-TC/CKT dated September 1, 1997, issued by the Ministry of Finance regarding accounting and auditing work for enterprises and organizations with foreign investment in Vietnam.

CIRCULAR

GUIDING DECREE NO. 155/1998/TT-BTC OF THE MINISTRY OF FINANCE ON DECEMBER 8, 1998, COMPLEMENTING CERTAIN POINTS IN CIRCULAR 60-TC/CĐKT OF SEPTEMBER 1, 1997 ISSUED BY THE MINISTRY OF FINANCE ON ACCOUNTING AND AUDITING FOR ENTERPRISES AND ORGANIZATIONS WITH FOREIGN INVESTMENT IN VIETNAM

To ensure compliance with Article 37 of the Law on Foreign Investment in Vietnam, to unify the provisions of Circular No. 60-TC/CĐKT dated September 1, 1997 issued by the Ministry of Finance, and to address difficulties faced by enterprises and organizations with foreign investment in Vietnam in registering and applying accounting systems, the Ministry of Finance hereby provides additional guidance on the following points:

In accordance with the provisions of Circular No. 60 TC/CĐKT dated September 1, 1997, issued by the Ministry of Finance, and to address difficulties faced by enterprises and organizations with foreign investment in Vietnam in registering and applying accounting systems, the Ministry of Finance supplements and provides guidance on the following points:

1. Enterprises and organizations with foreign investment (hereinafter referred to as enterprises and organizations) must conduct accounting and auditing activities in accordance with the Law on Foreign Investment in Vietnam, the provisions of Circular No. 60-TC/CĐKT of the Ministry of Finance, and the supplementary guidance provided in this Circular.

2. Regarding the application of accounting systems:

2.1. Enterprises and organizations must apply the Vietnamese enterprise accounting system established by Decision No. 1141 TC/QĐ/CĐKT dated November 1, 1995 of the Ministry of Finance and subsequent Circulars amending and supplementing Decision No. 1141 TC/QĐ/CĐKT of the Ministry of Finance.

Insurance companies shall follow the current insurance enterprise accounting system (Decision No. 1296 TC/QĐ/CĐKT dated December 31, 1996 of the Ministry of Finance).

2.2. The Ministry of Finance will consider allowing newly established enterprises and organizations, or those currently operating, to continue using other common accounting systems in the following cases:

Enterprises and organizations engaged in new business sectors formed in Vietnam, or in sectors without existing accounting regulations or guidelines, or in sectors where accounting systems are still under development, such as banking, securities, financial leasing, project management, etc.

2.3. Enterprises and organizations may delay the implementation date for adopting the Vietnamese accounting system:

Those enterprises and organizations that have not yet prepared the necessary conditions for the transition (such as insufficient knowledge about the Vietnamese accounting system, lack of training for accounting staff, inability to modify software), will be allowed by the Ministry of Finance to postpone the transition to the Vietnamese accounting system until December 31, 2000 at the latest.

2.4. Enterprises and organizations may be exempted from transitioning to the Vietnamese Enterprise Accounting System:

- If they only have up to three years remaining in their operations in Vietnam starting from January 1, 1999 due to the expiration of their investment permit or branch office permit for foreign law firms in Vietnam;

- If they cease operations (due to dissolution, bankruptcy, etc.) within six months from January 1, 1999.

3. Regarding the implementation of accounting work:

3.1. Accounting vouchers:

Accounting vouchers serving as the basis for recording in accounting ledgers must be original copies, complete with all required elements as stipulated. Photocopies or faxes do not have legal value for recording in accounting ledgers.

Regularly occurring accounting vouchers generated from outside Vietnam by contributing parties must be registered in advance in the accounting system registration file and must be translated into Vietnamese, including the name of the voucher and the economic transactions involved.

3.2. Registration of accounting books with local tax authorities:

a) For enterprises and organizations not conducting accounting through computers, one General Ledger must be registered.

b) For enterprises and organizations conducting accounting through computers, one General Ledger must be registered for manual recording of summarized data from accounting accounts.

Manual recording of figures in the registered General Ledger with the local tax authority should be conducted quarterly and annually in accordance with the financial reporting period. The beginning balance recorded in the General Ledger is the end-of-year balance from the previous fiscal year carried forward. Each quarter, the total occurrences of each account are recorded. The end-of-quarter and end-of-year balances are determined according to the principle of calculating the balance of each account.

c) The local tax authority confirms the number of pages in the ledger and stamps the pages before the enterprise or organization uses them.

3.3. Submission of financial statements:

Financial statements of enterprises and organizations with foreign investment must be submitted to the Ministry of Planning and Investment, the Ministry of Finance; the Tax Bureau, the Local Statistics Bureau (where the enterprise's main office is located); the Management Board of Export Processing Zones, Industrial Parks, High-Tech Zones (for enterprises operating in export processing zones, industrial parks, high-tech zones) and joint venture partners.

4. Regarding the currency used in accounting records:

The currency used in accounting records is the Vietnamese Dong. Enterprises with foreign investment may use foreign currencies (convertible currency units) for bookkeeping and preparing financial reports, but must register this in the requested accounting system and obtain written approval from the Ministry of Finance prior to implementation.

Other currencies different from the officially approved currency must be recorded in their original form and converted to the officially approved currency based on the actual transaction exchange rate of the economic transaction or the average buying and selling exchange rate published by the State Bank of Vietnam at the time of the economic transaction.

Exchange rate differences are handled in accordance with Circular No. 74 TC/TCT dated October 20, 1997 of the Ministry of Finance on guiding the implementation of tax regulations for various forms of investment under the Law on Foreign Investment in Vietnam.

5. Regarding language in accounting records:

Enterprises and organizations must use Vietnamese in accounting records and financial statements. In cases where two or more languages are used, Vietnamese must be one of the languages.

6. When applying the Vietnamese Enterprise Accounting System, enterprises and organizations have the right and responsibility as follows:

6.1- Proactively select accounting vouchers, bookkeeping formats, and accounting accounts to apply in accordance with the business activities of enterprises and organizations; may open additional second-level accounts in the system of accounts not yet provided (for types of accounts only defined at the first level), all third-level, fourth-level, ... accounts; detailed accounting books; management accounting reports as required by the enterprise's management (no need to register with the Ministry of Finance).

6.2- In cases where it is necessary to supplement first-level accounts; change the name of accounts; supplement the recording content of accounts; or supplement accounting vouchers, the reasons and specific explanations about these contents must be presented in the application registration file for the accounting system and can only be implemented after approval in writing by the Ministry of Finance.

7- Regarding the timing of switching to applying the Vietnamese accounting system:

The timing for switching to the Vietnamese accounting system begins from January 1, 1999, for enterprises and organizations with a fiscal year being the Gregorian calendar year; or at the beginning of the fiscal year 1999 for enterprises with a fiscal year different from the Gregorian calendar year.

8- Procedures for registering the applied accounting system:

8.1- Initial registration:

a) If the enterprise or organization applies the Vietnamese Enterprise Accounting System without any amendments or supplements, it only needs to submit a registration letter to the Ministry of Finance, attaching a copy of the Investment License, or Business License and the accounting manager's file as stipulated from point 3.1.1 to point 3.1.4 of Circular No. 60 TC/CĐKT.

b) In cases where the Vietnamese Enterprise Accounting System with supplements or amendments is applied, it is necessary to attach a registration file for the accounting system including a statement of reasons and content requesting supplements or amendments.

c) In cases where an application is made for another common accounting system, the registration file must clearly state the reasons and present the entire content of the requested accounting system (as guided in point 3 - Section D - Part III - Circular No. 60 TC/CĐKT).

8.2- Registration for switching:

a) In cases where switching from a foreign accounting system to the Vietnamese Enterprise Accounting System is registered and there is no change in the accounting manager, only a letter requesting the switch of the accounting system (according to Appendix No. 01 of Circular No. 60 TC/CĐKT) and a photocopy of the previous approval letter for the accounting system, along with the investment license number or business license number issued, need to be submitted.

b) In cases where switching is registered and there is a request for supplements or amendments to the applied accounting system, or changes in the accounting manager, in addition to the letter requesting the switch of the applied accounting system, a statement of reasons, content requiring supplements or amendments, and relevant documents concerning the accounting manager according to regulations must also be provided.

8.3 - Requesting a delay in the timing for switching to the Vietnamese Accounting System:

Enterprises and organizations must submit a letter clearly stating the reasons for requesting a delay in the switching period, along with a copy of the investment license or business license and the previous approval letter for the accounting system to the Ministry of Finance. Enterprises and organizations must commit to advancing the necessary work to ensure the switch to the Vietnamese Accounting System within the approved period by the Ministry of Finance.

8.4 - Cases exempted from switching to the Vietnamese Accounting System:

Enterprises and organizations must submit a letter clearly stating the reasons for requesting exemption from switching, along with a copy of the investment license or business license and the previous approval letter for the accounting system to the Ministry of Finance, and have confirmation from the issuing authority of the investment license or business license (if ceasing operations due to dissolution or bankruptcy).

9 - Regarding procedures for registering the applied accounting system and retaining the registration files for the applied accounting system in Export Processing Zones, Industrial Parks, or High-Tech Zones:

- For enterprises and organizations registering the applied accounting system with the Management Board of Export Processing Zones, Industrial Parks, or High-Tech Zones under the delegation of the Ministry of Finance, they shall implement the provisions set out in Circular No. 1067 TC/CĐKT dated April 6, 1998, of the Ministry of Finance regarding the approval of accounting systems in Export Processing Zones and Industrial Parks.

- The registration files for the applied accounting system shall be prepared in accordance with the provisions from point 3.1.1 to point 3.1.4 of Circular No. 60 TC/CĐKT dated September 1, 1997 (four sets bound together).

- After approving the applied accounting system for enterprises, the accounting system files will be retained as follows:

- One set retained by the registering enterprise;

- One set retained by the tax authority;

- One set retained by the Ministry of Finance;

- One set retained by the Management Board of the export processing zone, industrial park, or high-tech zone.

10 - The Ministry of Finance requires enterprises and organizations to take positive measures to switch to applying the Vietnamese Accounting System:

- Organize research, training, and education for accounting managers, accountants, and management staff on current regulations of the Vietnamese State regarding accounting and auditing for enterprises and organizations with foreign investment capital and the Vietnamese Enterprise Accounting System.

- Prepare good material conditions for the accounting system, accounting books, and develop or modify software to be compatible with the application of the Vietnamese Accounting System.

11- State management agencies and local Tax Bureaus must actively participate in guiding, directing, and inspecting foreign-invested enterprises and organizations under their management to fully comply with current regulations on accounting and auditing for foreign-invested enterprises and organizations.

12 - This Circular takes effect fifteen days after the date of signature.

During implementation, if there are difficulties or obstacles, please reflect them to the Ministry of Finance for study and resolution.