CIRCULAR

Detailed guidance on the uniform application of planning systems, cost accounting, and circulation fees for state-owned enterprises and joint public-private enterprises in the South

Based on the  Prime Minister's Decision No. 443 TTg dated December 6, 1977, allowing the uniform application of planning systems, cost accounting, and circulation fees for state-owned enterprises and joint public-private enterprises in the South according to current regulations (mainly based on Decision No. 43-CP dated September 16, 1960 of the Council of Ministers promulgating the "Provisional Regulations on Planning, Cost Accounting, and Circulation Fees," and Circular No. 186- TTg dated July 2, 1971 of the Prime Minister regarding costs and circulation fees), the Ministry of Finance, after reaching consensus with the State Planning Commission and the State Price Commission, provides detailed guidance as follows:

1.  Content of costs and circulation fees :

Planned cost price - Includes labor expenses and materialized labor costs during production at the maximum allowable level and that can be planned. Planned costs are established from economic and technical standards and financial norms.

Actual costs  - Include all actual lawful expenses recorded by the accountant. It serves as a basis for comparing with planned costs and setting cost reduction targets for enterprises in future years.

Costs and circulation fees include only those expenses related to production, consumption of products, and commodity circulation. liên quan đến sản xuất, tiêu thụ sản phẩm và lưu chuyển hàng hóa. The content of planned costs and calculation methods must be uniformly implemented according to the above current systems and specific provisions for each industry (for example, for industrial enterprises, uniformly calculating cost plan indicators and forms issued under Decision No. 302-TTg dated July 7, 1976 of the Prime Minister). Now, some expense items in costs that need attention in southern enterprises are clarified:

a) Depreciation cost of fixed assets   The competent ministry needs to stipulate a unified depreciation rate and apply it according to the ministry's regulations. For the time being, where the ministry has not specified, the existing depreciation rate (amortization) currently applied in southern enterprises may be used. Regarding fixed asset values, enterprises must base their temporary revaluation of fixed assets on inventory results and the guidance of the Central Asset Inventory Board to reasonably reflect the situation of enterprise fixed assets and capital, as well as reasonably reflect depreciation costs in product costs (according to Directive No. 219-TTg dated May 20, 1977 of the Prime Minister). Only by revaluing in this way can the situation of enterprise fixed assets and capital be relatively reasonably reflected, as well as the depreciation costs in product costs. Industry managers should guide enterprises to fully implement management and accounting systems for fixed assets, basic depreciation, and major repair depreciation, with basic depreciation contributions to the state budget, etc.

b) Material costs in product costs - Materials are calculated based on state-set prices. For other materials, prices are determined by the direct superior authority or the enterprise director according to the division of responsibilities and price management by the state. If there is a difference between actual prices and planned prices, separate accounting must be done for the impact of price changes on costs and profits to assess the degree of plan completion and handle revenue collection accurately.

c) In accordance with the Prime Minister's directive, units and enterprises that have provided mid-shift meals since before now shall continue to maintain the same beneficiaries and meal levels (without expanding the application to higher-level management bodies), and these costs shall be accounted for in product costs under the category of non-wage allowances for workers and staff.

d) In accordance with the Prime Minister's directive, units and enterprises that have provided transportation costs for workers and staff commuting shall continue to maintain these costs, which shall be accounted for in product costs under the category of enterprise management expenses.

e) Medical expenses shall be implemented as stipulated in Point 11 of Circular No. 186-TTG dated July 2, 1971, and Regulation No. 91-TTG dated April 25, 1974, meaning that ordinary medical expenses managed by the enterprise shall be included in enterprise management expenses within product costs. Additionally, no expenses for hospitals, sanatoriums, or medical facilities shall be borne by southern enterprises; if such expenses exist, they must now be transferred to the unified management of the health sector and covered by the health service fund of the state budget.

g) Expenses for self-defense forces, officers, and reserve military personnel during training shall be accounted for in product costs under the category of enterprise management expenses, in accordance with Point 17 of Circular No. 186-TTG mentioned above.

h) Funds allocated to higher-level economic accounting organizations.

Enterprises allocate funds to higher-level economic accounting organizations (such as companies, groups, etc., according to the agreed ratio by the Ministry of Finance for central enterprises and local finance bureaus for local enterprises) based on a percentage of total product costs and annual approved expenditures for higher-level accounting organizations. At year-end, the higher-level accounting organization must settle surplus or deficit funds with the state budget.

2. Expenses not included when planning costs and circulation fees but included when accounting for actual costs and circulation fees.

These expenses are usually caused by subjective shortcomings in production and business operations of enterprises, or any other expenses without guaranteed funding sources, which must be included in actual costs upon occurrence, such as:

- Expenses and losses due to inappropriate application of technology.

- Losses and scrap (except for casting, glass industries, and newly established enterprises, which are allowed to include a certain proportion in planned costs as specified by the State Planning Commission).

- Damages, losses, and compensation for collisions, overturns in transportation enterprises generally (before state insurance is implemented).

- Shortages or damages to raw materials, materials, finished products exceeding the prescribed limits by the State (natural losses within the prescribed limits are included in cost plans).

- Warehouse storage fees, fines for breach of contract.

- Bank loan interest shall be handled as follows: interest on loans within and outside the plan shall be recorded in actual cost (interest on loans within and outside the plan that can be anticipated for national economic benefits may be included in cost plans). Overdue debt interest, compensation or penalties related to credit and payment transactions shall be recorded as enterprise profit or loss.

- Production stoppages shall be recorded in actual costs (except for seasonal production enterprises approved by the competent authority to include in cost plans). Storage costs for enterprises halted due to objective reasons according to government policy (for central enterprises) or provincial/municipal People's Committees (for local enterprises) shall be covered by the state budget according to approved budgets.

Costs resulting from production stoppages caused by customers shall be handled based on economic contracts; remaining losses after handling shall be recorded as enterprise losses.

3. Types of expenses not to be included in cost and circulation fees.

When planning and accounting, such expenses must not be included in cost and circulation fees because they are not directly related to production, product consumption, and goods circulation, and have been guaranteed by specified sources of funding.

3.1. Expenses guaranteed by specified sources of funding and not to be included in cost and circulation fees:

a) Expenses related to serving cultural and daily life activities of enterprise workers and staff such as:

- Cultural and sports activities funded by the Trade Union Fund and welfare fund of the enterprise.

- Expenses for dining halls, dormitories, and kindergartens which should cover costs through income, with additional subsidies from the State for collective meals and kindergartens.

State subsidies for collective meals are calculated at 2.4 dong per meal (equivalent to 3 dong in the North), for 60 meals per month (including main meals and lunch, night shift allowances). These subsidies are included in expenses outside the cost mentioned below. In addition to the State subsidy, those eating collectively still need to contribute 5% of their monthly food expenses for dining hall management. The enterprise managing the dining hall must ensure income covers expenses and cannot incur losses. If there are losses, they cannot be recorded in cost or enterprise losses but must be covered by the welfare fund.

Excess expenses over income for kindergartens (including those belonging to central agencies located in local areas) shall be borne by the local budget.

Excess expenses over income for collective housing under the current supply system shall be recorded as enterprise losses.

b) Expenses for construction, major repairs of architectural works, research and experimental work (as per the State plan) shall be funded from other sources such as basic construction funds, major repair funds, or scientific research funds (if the research aims to improve product quantity and quality, it may be included in product costs).

c) Expenses for producing non-production value-added products such as self-made tools, spare parts, semi-finished products for internal use shall be handled as follows: if these products are used in the production of main products, they shall be included in the cost of main products. If they are used for major equipment and building repairs, they shall be funded by the major repair fund. If they are stored in inventory, they shall be funded by the enterprise's circulating capital without being included in costs.

d) Losses due to natural disasters and fires. Before establishing a state insurance fund, such losses shall temporarily be recorded as enterprise losses.

Losses due to stolen materials, goods, unrecoverable debts, and canceled orders.

Management principles do not allow these occurrences and they must be handled according to existing regulations such as material responsibility systems and economic contracts. Remaining losses after handling shall be recorded as enterprise losses.

3.2 Expenses covered by the State budget shall not be included in cost and circulation fees. Đó là :

: Total cost of electricity purchase for the year (VND) from direct and indirect power plants participating in the electricity market, as specified in Clause 2 of this Article;These are expenses outside cost and circulation fees currently applied in enterprises such as:

- Annual hardship allowances for workers and staff

- Allowances for large families starting from the third child

- Severance pay

- Fixed interest payments (i.e., payments to capitalists in joint public-private enterprises)

- Collective meal subsidies, calculated per meal

For southern enterprises, the above expenses outside cost and circulation fees must have officially approved budgets, and actual expenditures shall be deducted from profits paid to the state budget. The competent authority shall guide enterprises to prepare individual expense budgets (according to Circular No. 23-TC/VP dated January 14, 1970 of the Ministry of Finance), consolidate industry-wide budgets, submit them to financial authorities for approval, and record deductions from enterprise profits paid to the state budget. Financial authorities and banks will oversee actual expenditures and deduct them from enterprise profits. If enterprises suffer losses due to these deductions, they will be compensated according to approved budgets and settled based on actual expenditures.

b)Expenses for the Party, Trade Union, and Communist Youth Leagueshall be handled as follows: salaries and office supplies shall be funded by the respective organizations; purchases and repairs of working equipment (such as desks and chairs, repairs of office premises) for these organizations shall be included in cost.

c) Trade Union contributions - The State allocates two percent of the actual salary fund submitted to the trade union for ensuring the expenditure needs of the trade union system, including expenses related to mass cultural activities and physical education and sports as mentioned in Point 3-1a above. Based on the planned salary fund, the State budget directly transfers this allocation into the trade union fund. At the time of settlement, payment will be made according to the actual salary fund expended (see Article 13 of Circular No. 186-TTg dated July 2, 1971).

d) Expenses for rationalizing production, improving technology, and testing new products- Within the scope of research, costs funded by the State budget through dedicated funds, when establishing a production development incentive fund at enterprises, will be covered by this fund. When using dedicated funds or the production development incentive fund to purchase equipment or labor tools, the enterprise must record an increase in fixed assets or working capital of the enterprise.

Successful research results applied to production shall be accounted for in the cost price in accordance with Point 6 of Circular No. 186-TTg mentioned above.

Research costs within the scope of enterprises in the southern region that have not established a production development incentive fund shall temporarily be offset against the approved budgeted expenditures included in the profit plan submitted to the State budget. Each item of expenditure, examination and approval of the budget, as well as settlement of expenditures, must comply with the current management procedures for public funds. Enterprises without a profit plan shall be provided funding according to the budget.

e) Expenses for training cadres and workers.

For newly established enterprises or those expanding construction..., the entire expense for training production workers, management personnel, and technical staff shall be covered by the basic construction fund (as part of other construction capital according to the approved plan).

For enterprises currently in production:

- All mentoring and training of cadres and workers during production and business aimed at utilizing individual equipment, replacing workers who have lost their work capacity, upgrading technical levels, and professional qualifications fall under the responsibility of the enterprise and shall be accounted for in the cost price.

- Any training of cadres and workers for primary, intermediate, and advanced vocational training, regardless of the form of organization, whether organized by the Ministry or the enterprise, full-time or part-time, if there are training targets listed in the national plan, shall only be funded from the public training funds of the main managing sector.

- Cadres and workers traveling abroad for observation, and cadres and workers attending long-term vocational schools shall be funded from the public training funds of the main managing sector.

g) Expenses for experts :

- The salary of experts shall be covered by the public training funds of the main managing sector of the enterprise (for production and business enterprises), or the basic construction fund (for construction sites).

- The salary of service personnel for experts shall also be covered from the same source as the experts' salaries; the entity to which the interpreter belongs shall pay the salary.

- Expenses for tea, water, and cigarettes when experts come to work at the enterprise shall be accounted for in the cost price.

h)||| Other expenses :

- For hosting foreign delegations, if only ordinary reception arrangements are made (tea, cigarettes, etc.), these expenses shall be accounted for in the cost price; if guests stay and incur significant expenses or receive gifts as requested by the host agency, the host agency shall cover the expenses.

- For exhibitions organized on May 1st, September 2nd, etc., according to the State's policy, if the enterprise is required to participate in the exhibition by the organizing agency, the organizing agency shall cover the expenses; if the exhibition is organized for advertising and product promotion, the expenses shall be accounted for in the cost price.

Distinguishing between costs within and outside the cost price, costs covered by State budget sources or other sources, etc., is a new matter for enterprises in the southern region. Unifying the implementation of planning, cost accounting, and circulation fees in southern enterprises is an important step towards strict management of various types of capital and production costs, serving as a basis for studying cost management based on standards, requiring enterprises to manage according to economic accounting systems, striving to increase productivity, reduce costs, enhance accumulation, and improve the efficiency of capital utilization.

Therefore, it is proposed that the Ministries (General Departments) in charge, Provincial People's Committees, and Municipal People's Committees guide subordinate enterprises to strictly follow the State regulations already issued, direct enterprises to carry out necessary preparatory work such as: developing and reviewing economic and technical norms, labor usage norms, equipment, materials, and capital norms as a basis for preparing plans with solid foundations, training and supplementing cadres in planning, cost accounting, and circulation fees to begin unified accounting from January 1, 1978, and apply them immediately in calculating and determining State plans and State budgets for 1978.