Circular No. 174/2010/TT-BTC Amending and Supplementing the Accounting System for the Vietnam Universal Service Fund issued pursuant to Decision No. 74/2007/QD-BTC dated August 21, 2007 of the Minister of Finance.

CIRCULAR

Amending and supplementing the Accounting System for the Vietnam Universal Service Fund issued together with Decision No. 74/2007/QĐ-BTC dated August 21, 2007

 of the Minister of Finance

________________

Pursuant to the Accounting Law No. 03/2003/QH11 dated June 17, 2003;

Pursuant to the Telecommunications Law No. 41/2009/QH12 dated December 4, 2009;

Pursuant to the Decree No. 118/2008/NĐ-CP dated November 27, 2008 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance;

Pursuant to Decision No. 191/2004/QĐ-TTg dated November 8, 2004 of the Prime Minister on the establishment, organization, and operation of the Vietnam Universal Service Fund;

Pursuant to Decision No. 186/2007/QĐ-TTg dated December 3, 2007 of the Prime Minister amending Decision No. 191/2004/QĐ-TTg of the Prime Minister on the establishment, organization, and operation of the Vietnam Universal Service Fund.

The Ministry of Finance issues guidelines to amend and supplement the Accounting System applicable to the Vietnam Universal Service Fund issued together with Decision No. 74/2007/QĐ-BTC dated August 21, 2007 of the Minister of Finance as follows:

Article 1. Scope and Applicability

1. This Circular stipulates certain Accounts and financial report templates specifically applicable to the Vietnam Universal Service Fund (hereinafter referred to as the Fund).

2. For accounting matters not covered in this Circular, the Vietnam Universal Service Fund shall implement the Accounting System issued together with Decision No. 74/2007/QĐ-BTC dated August 21, 2007 of the Minister of Finance regarding the issuance of the Accounting System applicable to the Vietnam Universal Service Fund (hereinafter referred to as Decision No. 74/2007/QĐ-BTC) and other Circulars guiding the implementation of accounting standards.

Article 2. Provisions on the application of the accounting account system

The accounting account system applied to the Vietnam Universal Service Fund shall be implemented according to the provisions of Decision No. 74/2007/QĐ-BTC and the following amendments and supplements:

1. Amend the name and number of some accounting accounts

- Change the number of Account 25112, 25122 – "Substandard Debts" to Account 25113, 25123 – "Substandard Debts".

- Change the number of Account 25113, 25123 – "Doubtful Debts" to Account 25114, 25124 – "Doubtful Debts".

- Change the number of Account 25114, 25124 – "Loss Risk Debts" to Account 25115, 25125 – "Loss Risk Debts".

- Change the name and number of Account 359 – "Universal Service Support Reserve Fund" to Account 259 – "Loan Risk Reserve".

- Change the name and number of Account 353 – "Universal Service Support Fund" to Account 372 – "Public Service Support Fund" and abolish two second-level accounts under this account, as follows:

+ Abolish Account 3531 – "Universal Service Accessibility Support Fund";

+ Abolish Account 3532 – "Universal Service Obligation Support Fund".

- Change the number of Account 431 – "Reward and Welfare Fund" to Account 353 – "Reward and Welfare Fund". Account 353 has three second-level accounts as follows:

+ Change the number of Account 4311 – "Reward Fund" to Account 3531 – "Reward Fund";

+ Change the number of Account 4312 – "Welfare Fund" to Account 3532 – "Welfare Fund";

+ Change the number of Account 4313 – "Welfare Fund forming Fixed Assets" to Account 3533 – "Welfare Fund forming Fixed Assets";

- Change the name and number of Account 005 – "Support Capital Level" to Account 020 – "Support Capital".

- Change the number of Account 006 - "Loan Capital Level" to Account 025 – "Loan Capital Level".

2. Add some accounting accounts

- Account 128 “Short-term Investments Other” and two second-level accounts, as follows:

+ Account 1281 – "Time Deposits";

+ Account 1288 – "Other Short-term Investments".

- Add Account 25112, 25122 – "Debts to Watch".

- Add two third-level accounts under Account 3388 “Other Payables and Receivables”:

+ Account 33881 – "Revenue from Sale of Customer Collateral and Pledged Assets";

+ Account 33888 – "Other Payables and Receivables".

- Add Account 3389 – "Unemployment Insurance".

- Add Account 005 – "Customer Collateral and Pledged Assets".

- Add Account 021 – "Pending Settlement Support Capital".

- Add Account 026 – "Unreceived Interest and Fees on Loans".

3. Not to use accounting accounts

- Discontinue Account 315 – "Due Long-term Debts".

The list of the accounting account system applicable to the Vietnam Universal Service Fund after amendment and supplementation is as follows (see Appendix 01).

Article 3. Short-term investment accounting other than short-term investments

Supplement Account 128 "Short-term investments other"

This account is used to reflect the current amount and changes in increase and decrease of other short-term investments such as time deposits under one year, ...

Accounting must open detailed books to track each investment item and each deposit according to term and location of investment.

Structure and content reflected in Account 128 - Short-term investments other

Debit Side:

Increase in value of other short-term investments.

Credit Side:

Decrease in value of other short-term investments.

Debit Balance:

Remaining value of other short-term investments at the end of the period.

Account 128 - Short-term investments other has two sub-accounts:

- Sub-account 1281 - Time deposits: Reflects the situation of increase, decrease and current amount of time deposits at banks and financial organizations with terms not exceeding 12 months.

- Sub-account 1288 - Other short-term investments: Reflects the situation of increase, decrease and current amount of other short-term investments.

Accounting methods for some main economic transactions

1. When using cash, bank deposits, ... to make short-term investments, record:

Debit Account 128 - Short-term investments other (1281, 1288)

            Credit Accounts 111, 112, ...

2. When interest income from time deposits and other short-term investments occurs, record:

Debit Account 111 - Cash

Debit Account 112 - Bank Deposits, Treasury

Debit Account 138 - Other Receivables

            Credit Account 511 - Income from Business Activities (5112, 5118).

3. When receiving interest income that is due, record:

Debit Accounts 111, 112, ...

            Credit Account 138 - Other Receivables.

4. When recovering other short-term investments, record:

Debit Accounts 111, 112, 211, ....

Debit Account 631 - Business Activity Expenses (In case of loss)

            Credit Account 128 - Short-term investments other (Cost) (1281, 1288)

            Credit Account 511 - Income from Business Activities (In case of profit).

Article 4. Guidance on accounting for transferring loan portfolios

1. In cases where the borrowing unit cannot repay the medium and long-term loans when they become due, if the fund does not extend the repayment period, the accountant must prepare a transfer voucher to move the loan from Standard Loans to Loans of Concern, record:

Debit Account 25112 - Loans of Concern, or

Debit Account 25122 - Loans of Concern

            Credit Account 25111 - Standard Loans, or

            Credit Account 25121 - Standard Loans.

2. In cases of transferring from Loans of Concern to Non-Performing Loans, from Non-Performing Loans to Doubtful Loans, and from Doubtful Loans to Loans Likely to be Loss, there must be evidence and a resolution document from the competent authority based on the current regulations of the State Bank. Based on the resolution document, the accountant records:

- When transferring from Loans of Concern to Non-Performing Loans, record:

Debit Account 25113 - Non-Performing Loans, or

Debit Account 25123 - Non-Performing Loans

            Credit Account 25112 - Loans of Concern, or

            Credit Account 25122 - Loans of Concern.

- When transferring from Non-Performing Loans to Doubtful Loans, record:

Debit Account 25114 - Doubtful Loans, or

Debit Account 25124 - Doubtful Loans

            Credit Account 25113 - Non-Performing Loans, or

            Credit Account 25123 - Non-Performing Loans.

- When transferring from Doubtful Loans to Loans Likely to be Loss, record:

Debit Account 25115 - Loans Likely to be Loss, or

Debit Account 25125 - Loans Likely to be Loss

            Credit Account 25114 - Doubtful Loans, or

            Credit Account 25124 - Doubtful Loans

Article 5. Accounting for Loan Risk Provision

The structure, content reflected, and accounting methods of Account 259 – "Loan Risk Provision" remain unchanged compared to Account 359 – "Loan Risk Provision Fund" as stipulated in Decision No. 74/2007/QĐ-BTC.

Article 6. Accounting for Unemployment Insurance

Add Account 3389 – Unemployment Insurance.

This account is used to reflect the situation of contributions and payments for unemployment insurance for workers at the Public Telecommunications Service Fund in accordance with laws on unemployment insurance. The Public Telecommunications Service Fund must open detailed accounting books to track unemployment insurance.

Structure and content reflected in Account 3389 – Unemployment Insurance

Debit Side: Amounts of unemployment insurance already paid to the unemployment insurance fund management agency.

Credit Side:

- Allocate unemployment insurance to management expenses;

- Deduct unemployment insurance from employee salaries.

Credit Side Balance: Amounts of unemployment insurance allocated but not yet paid to the unemployment insurance fund management agency.

Accounting methods for some main economic transactions

1. Periodically allocate unemployment insurance to management expenses, record:

Debit Account 642 – Management Expenses

            Credit Account 338 – Other Payables, Payables (3389).

2. Calculate the amount of unemployment insurance that employees must pay, deduct from their salaries, record:

Debit Account 334 – Employee Payables

            Credit Account 338 – Other Payables, Payables (3389).

3. When paying unemployment insurance to the unemployment insurance fund management agency, record:

Debit Account 338 – Other Payables, Payables (3389)

            Credit Accounts 111, 112.

Article 7. Accounting for Reward and Welfare Funds

The structure, content reflected, and accounting methods of Accounts 3531, 3532, 3533 remain unchanged compared to Account 431 (4311, 4312, 4313) as stipulated in Decision No. 74/2007/QĐ-BTC dated August 21, 2007 of the Minister of Finance.

Article 8. Accounting for Employee Costs

Amend the content of Account 6421 – Employee Costs as follows:

This account reflects amounts payable to staff such as: salaries, allowances, and deductions included in costs, including: social insurance, health insurance, unemployment insurance, trade union fees of the Board of Directors, and employees of the Public Telecommunications Service Fund.

Article 9. Accounting for Subsidized Capital

Content of Account 020 – "Subsidized Capital" is as follows:

This account is used to reflect the amount of capital granted, orders placed, or contracts won; the amount granted, temporarily advanced during the period, cumulative up to the end of the period, and the amount still to be granted or recovered from enterprises to maintain and develop public telecommunications services and other public tasks according to the Prime Minister's decision. Accounting should open detailed books for each enterprise receiving subsidized capital.

Structure and content reflected in Account 020 – Subsidized Capital

Debit Side:

- Amount of subsidized capital granted approved by the Ministry of Information and Communications, or the amount paid according to the contract (order placed, or contract won, etc.);

- Amount of capital granted and recovered;

Credit Side:

- Amount of capital granted;

- Additional amount of capital granted;

- Difference between the amount of capital granted and the amount settled.

Debit Side Balance: Amount of capital still to be granted at the end of the period.

Credit Side Balance: Amount of capital still to be recovered at the end of the period (if any).

The Fund must open detailed books for each enterprise receiving subsidized capital to reflect the amount of capital granted, the amount granted in the reporting year, and cumulative from the start of granting until the end of the reporting year's accounting period.

Accounting methods for some main economic transactions

1. When determining the level of subsidized capital for enterprises, the accountant records on the debit side of Account 020 – Subsidized Capital (Account outside the Balance Sheet).

2. When the Fund disburses money for subsidized capital to enterprises to implement maintenance and development of public telecommunications services and other tasks as prescribed, the accountant records:

Debit Account 372 – Public Service Support Fund

            Credit Accounts 111, 112, ...

Simultaneously, record on the credit side of Account 020 – Subsidized Capital.

3. After completing settlement procedures, based on the settlement notification, the accountant records the books as follows:

3.1. In cases where the amount granted is greater than the settled amount, the difference is recorded on the credit side of Account 020 – Subsidized Capital.

3.2. In cases where the amount granted is greater than the settled amount:

- When recovering the difference between the amount granted and the settled amount, record:

Debit Accounts 111, 112

            Credit Account 372 – Public Service Support Fund

- Simultaneously, record on the debit side of Account 020 – Subsidized Capital (Recovery amount).

Article 10. Accounting for Support Capital Pending Settlement

Supplement Account 021 – "Support Capital Pending Settlement":

This account is used to reflect the total amount of capital from the Fund that has been provided to enterprises according to regulations and is currently awaiting settlement procedures and the status of such settlements.

Structure and Content Reflected in Account 021 – Support Capital Pending Settlement

Debit Side:

- The amount of capital already provided and temporarily advanced to enterprises awaiting settlement procedures;

- The additional capital provided when the settlement amount exceeds the amount already provided and temporarily advanced.

Credit Side:

- The settled amount of capital of enterprises;

- The amount of capital already provided that has been recovered.

Debit Balance: The amount of capital already provided and temporarily advanced to enterprises that have not yet been settled or the difference between the amount of capital provided exceeding the settled amount but not yet recovered.

Support capital temporarily advanced and awaiting settlement procedures is monitored in detail on an annual basis for each enterprise.

Accounting methods for some main economic transactions

1. At year-end, when closing the accounting books, if the temporarily advanced capital has not yet been settled, the accountant reflects the unsettled capital provided and temporarily advanced to enterprises on the debit side of Account 021 – Support Capital Pending Settlement (an account outside the Balance Sheet).

2. When the Fund completes the settlement procedure and notifies the enterprise, the accountant records based on the settlement document to reflect the settled amount on the credit side of Account 021 – Support Capital Pending Settlement (the settled capital).

2.1. If the settlement amount exceeds the amount provided:

- When the Fund disburses additional capital to the enterprise, record:

Debit Account 372 – Public Service Support Fund

            Credit Accounts 111, 112.

- Simultaneously, record on the debit side of Account 021 – Support Capital Pending Settlement (Additional Capital Provided) (an account outside the Balance Sheet).

2.2. If the settlement amount is less than the amount provided:

- When the Fund recovers the money, record:

Debit Accounts 111, 112

            Credit Account 372 – Service Public Welfare Fund.

Simultaneously, record on the credit side of Account 021 – Support Capital Pending Settlement (Recovery Amount) (an account outside the Balance Sheet).

Article 11. Amending Part Two – Financial Reporting System

1. Balance Sheet – Form B01 – VTF (Annex No. 03)

1.1. Items in the Balance Sheet

- Amend the basis for obtaining data to prepare the item "Equivalent Cash" – Code 112. Data to be recorded in this item is the debit balance detail of Account 121 "Short-term Financial Investments" on the detailed ledger of Account 121 and the debit balance detail of Account 128 "Other Short-term Investments" on the detailed ledger of Account 128 for financial investments with a recovery or maturity period of no more than three months, low risk, and easily convertible into a certain amount of cash from the date of purchase.

- Amend the item "Advance Payment from Customers" – Code 313 on the Balance Sheet. This item reflects the total advance payment from customers for services at the reporting date. This item does not reflect unperformed revenues (including advance revenue). Data to be recorded in the "Advance Payment from Customers" item is the credit balance detail of Account 131 – "Customer Receivables" opened for each customer on the detailed ledger of Account 131.

- Change the code of the item "Reward and Welfare Fund" – Code 431 on the Balance Sheet to Code 323 on the Balance Sheet. Data to be recorded in the "Reward and Welfare Fund" item is the credit balance of Account 353 – "Reward and Welfare Fund" on the ledger of Account 353.

- Amend the name and code of the item "Service Public Welfare Fund" – Code 338 on the Balance Sheet to "Public Welfare Fund" Code 349 on the Balance Sheet. Data to be recorded in the "Public Welfare Fund" item is the credit balance of Account 372 – "Public Welfare Fund" on the ledger of Account 372.

- Change the code of the item "Provision for Loan Risk" – Code 339 on the Balance Sheet to Code 264 on the Balance Sheet. Data for this item is recorded as a negative number in parentheses (...). Data to be recorded in the "Provision for Loan Risk" item is the credit balance of Account 259 – "Provision for Loan Risk" on the ledger of Account 259.

- Add the item "Unearned Revenue Short-term" – Code 328 on the Balance Sheet. This item reflects short-term unearned revenue at the reporting date. Data to be recorded in the "Unearned Revenue Short-term" item is the credit balance of Account 3387 – "Unearned Revenue" on the detailed ledger of Account 3387 (detail of short-term unearned revenue).

- Add the item "Unearned Revenue Long-term" – Code 338 on the Balance Sheet. This item reflects long-term unearned revenue at the reporting date. Data to be recorded in the "Unearned Revenue" item is the credit balance of Account 3387 – "Unearned Revenue" on the detailed ledger of Account 3387 (detail of long-term unearned revenue).

1.2. Items Outside the Balance Sheet

- Amend the name and number of items outside the Balance Sheet: Item No. 5 – "Level of Support Capital" to Item No. 8 – "Support Capital".

- Amend the number of items outside the Balance Sheet: Item No. 6 – "Loan Capital Level" to Item No. 10.

- Amend the number of items outside the Balance Sheet: Item No. 7 – "Various Foreign Currencies" to Item No. 6.

- Amend the number of items outside the Balance Sheet: Item No. 8 – "Budgeted Expenditure for Public Services, Projects" to Item No. 7.

- Add an item outside the Balance Sheet: Item No. 5 – "Collateral and Pledged Assets of Customers".

- Add an item outside the Balance Sheet: Item No. 9 – "Support Capital Pending Settlement".

- Add an item outside the Balance Sheet: Item No. 11 – "Unreceived Interest and Fees on Loans".

2. Add "Report on the Use of Public Welfare Service Fund" – Form B06 – VTF (Annex No. 02)

2.1. Purpose of the Report on the Use of Public Welfare Service Fund

The report on the use of the Public Welfare Service Fund is a comprehensive report on the increase and decrease of the Public Welfare Service Fund, detailing the amount to be provided this year and the amount still to be provided from last year, the amount to be recovered, the amount temporarily advanced, the settled amount, the unsettled amount, and the amount still to be provided. The report consists of two parts:

- Part A: Summary of increases and decreases in the Public Service Support Fund: Reflecting the beginning balance, the increase (income) during the period, the decrease (expenditure) during the period that has been disbursed, and the ending balance of the Fund;

- Part B: Detailed situation of advance payments and settlement of the Public Service Support Fund: Reflecting the amount of support funds to be disbursed, the actual advance payments made, the amount to be recovered, the settled amount, the amount disbursed but not yet settled, and the amount still to be disbursed to the units receiving support;

2.2. Basis for preparing the report on the use of the Public Service Support Fund

- Based on the report on the use of the Public Service Support Fund from the previous year;

- Based on the general ledger and detailed ledger during the period of account 372 – "Public Service Support Fund", account 020 – "Support Capital" and account 021 – "Support Capital awaiting settlement";

2.3. Content and method of preparation

Part A – "Summary of Increases and Decreases in the Public Service Support Fund", consists of 4 columns:

- Column A – "Indicator": Reflecting the beginning balance, the increase (income) during the period, the decrease (expenditure) during the period, and the ending balance of the Public Service Support Fund;

- Column B – "Code Number": Reflecting code numbers from 01 to 04 corresponding to the indicators in Column A;

- Column 1 – "This Period": Reflecting the increase and decrease figures of the Public Service Support Fund during this period; The data to be recorded in this column is taken according to each indicator in Column A. Specifically:

+ Indicator "Beginning Balance", the data recorded in this column is obtained by taking the beginning balance of Account 372 – "Public Service Support Fund" on the Account 372 general ledger;

+ Indicator "Increase (income) during the period" (Code number 02), the data recorded in this column is obtained by taking the total occurrence during the period on the Credit side of Account 372 "Public Service Support Fund" on the Account 372 general ledger;

+ Indicator "Decrease (expenditure) during the period" (Code number 03), the data recorded in this column is obtained by taking the total occurrence during the period on the Debit side of Account 372 "Public Service Support Fund" on the Account 372 general ledger; and

+ Indicator "Ending Balance" (Code number 04), the data recorded in this column is obtained by taking the ending Credit balance of Account 372 – "Public Service Support Fund" on the Account 372 general ledger or Code number 04 (Column 2) = Code number 01 (Column 2) + Code number 02 (Column 2) - Code number 03 (Column 2);

- Column 2 – "Cumulative up to the end of this period": Reflecting the cumulative figure from the beginning of the year to the end of the reporting period of the Public Service Support Fund. The data to be recorded in this column is taken according to each indicator in Column A, as follows:

+ Indicator "Beginning Balance" (Code number 01) = Code number 01 of Column 1 of this period's report;

+ Indicator "Increase (income) during the period" (Code number 02) = Code number 02 of Column 1 of this period's report plus (+) Code number 02 of Column 2 of the previous period's report;

+ Indicator "Decrease (expenditure) during the period" (Code number 03) = Code number 03 of Column 1 of this period's report plus (+) Code number 03 of Column 2 of the previous period's report;

+ Indicator "Ending Balance" (Code number 04) = Code number 04 of Column 1 of this period's report or calculated as follows:

Code number 04 = Code number 01 + Code number 02 - Code number 03.

Part B – "Detailed Situation of Advance Payments and Settlement of the Public Service Support Fund", Includes:

- Column A: Reflecting the name of the enterprise receiving support;

- Column 1: Reflecting the amount allocated to enterprises according to the approved plan or the number of orders, the number of successful bids this year. This column is recorded based on the occurrence during the period on the Debit side of Account 020, detailing the allocation amount to enterprises;

- Column 2: Reflecting the amount allocated last year that was carried over to this year for continued allocation. The data to be recorded in this column is based on the ending Debit balance of Account 020 "Support Capital" on the Account 020 detailed ledger, detailing the remaining amount to be allocated last year, or based on the data recorded in Column 13 of this report at the end of last year;

- Column 3: Reflecting the total amount to be allocated, including: the amount to be allocated this year and the remaining amount to be allocated last year (Column 3 = Column 1 + Column 2);

- Columns 4, 5, 6, 7: Reflecting the actual advance payments occurring during the reporting period and the cumulative amount from when it was allocated to the enterprise until the end of the reporting period that has not been settled;

+ Column 4: Reflecting the amount actually allocated for the allocation last year occurring during the reporting period. The data to be recorded in this column is based on the occurrence on the Credit side of Account 020 – "Support Capital" (Detailing the actual allocation of the allocation last year on the Account 020 detailed ledger);

+ Column 5: Reflecting the amount actually allocated for the allocation this year occurring during the reporting period. The data to be recorded in this column is based on the occurrence on the Credit side of Account 020 on the Account 020 detailed ledger – "Support Capital" (Detailing the allocation for the allocation this year);

+ Column 6 = Column 4 + Column 5;

+ Column 7: Reflecting the cumulative actual allocation from when it started being allocated to the unit until the end of the reporting period that has not been settled.

The data to reflect in this column is the data of this column of the previous period's report plus (+) the data of Column 6 of this period's report.

- Columns 8, 9: Reflecting the capital already settled this year and the cumulative amount settled until the end of the reporting period. The basis for recording is the settlement record and the occurrence on the Credit side of Account 021 on the Account 021 detailed ledger – "Support Capital awaiting settlement" (Detailing the amount settled this year and cumulatively);

- Columns 10, 11: Reflecting the capital already allocated that needs to be recovered this year and cumulatively. The data basis for recording in Column 10 is the settlement record of allocated capital and the occurrence on the Account 021 detailed ledger – "Settled Support Capital" (Detailing the amount needing recovery this year). The data to be recorded in Column 11 is based on the data recorded in Column 11 of the previous period's report plus (+) the data recorded in Column 10 of this period's report;

- Column 12: Reflecting the amount allocated but not yet settled. The data to be recorded in Column 12 is based on the Debit balance of Account 021 "Support Capital awaiting settlement" (Detailing the amount allocated but not yet settled);

- Column 13: Reflecting the amount still to be allocated. The basis for recording is the Debit balance of Account 020 "Support Capital" (Detailing the amount still to be allocated).

3. Financial Statement Notes – Form B09-VTF (Annex No. 04)

3.1. Supplement and amend some contents in Clause 3 "Short-term financial investments" – Section V – "Financial Statement Notes" – Form B09-VTF as follows:

"3 - Short-term financial investments

3.2. Delete Point 7 – Section V – Financial Statement Explanation: "Report on the situation of funding for the development and maintenance of public telecommunications services" and replace it with the content "Situation of using post-tax income from operations":

Situation of using post-tax income from operations

Unit of measurement:

Article 12. Effectiveness and Implementation:

1. This Circular takes effect from January 1, 2011.

2. The Director of the Accounting and Auditing Department, the Director of the Vietnam Universal Telecommunications Service Fund, and the Heads of relevant units shall be responsible for implementing this Circular./.