Circular No. 175/2011/TT-BTC guides accounting practices applicable to insurance brokerage enterprises.

CIRCULAR

Guidelines on accounting applicable to insurance brokerage enterprises

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

Pursuant to the Insurance Business Law No. 24/2000/QH10 dated December 9, 2000;

Pursuant to the Law Amending and Supplementing Certain Provisions of the Insurance Business Law No. 61/2010/QH12 dated November 24, 2010;

Pursuant to Decree No. 129/2004/NĐ-CP dated May 31, 2004 of the Government detailing and guiding the implementation of certain provisions of the Accounting Law applicable in business activities;

Pursuant to 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 Decree No. 45/2007/NĐ-CP dated March 27, 2007 of the Government detailing the implementation of certain provisions of the Insurance Business Law;

Pursuant to Decree No. 46/2007/NĐ-CP dated March 27, 2007 of the Government stipulating financial regulations for insurance enterprises and insurance brokerage enterprises;

The Ministry of Finance issues guidelines on accounting applicable to insurance brokerage enterprises as follows:

Article 1. Scope of Regulation and Applicability

1. These Circulars prescribe certain Accounts and Financial Statement formats applicable to insurance brokerage enterprises established and operating under Vietnamese law.

2. For accounting matters not covered in these Circulars, insurance brokerage enterprises shall implement the Accounting System for Enterprises issued together with Decision No. 15/2006/QĐ-BTC dated March 20, 2006 of the Minister of Finance (hereinafter referred to as Decision No. 15/2006/QĐ-BTC); Circulars guiding the implementation of accounting standards; and Circulars amending and supplementing the Accounting System for Enterprises.

Article 2. Provisions on applying the accounting account system

The accounting account system applicable to insurance brokerage enterprises shall be implemented according to the provisions of Decision No. 15/2006/QĐ-BTC; Circular No. 244/2009/TT-BTC, with the following amendments and supplements:

1. Amend and supplement accounting accounts and the content reflected in the accounts:

1.1. Account 1388 - "Other Receivables" reflects additional receivables from customers for insurance premiums collected on behalf of insurance companies, and premiums collected on behalf of reinsurers from ceding insurers. Insurance brokerage enterprises must detail the premiums collected from customers for each insurance company and premiums collected from ceding reinsurers for each accepting reinsurer, both domestic and foreign.

Supplement four third-level accounts under Account 1388 as follows:

- Account 13881 - Receivables for insurance premiums collected on behalf of insurance companies;

- Account 13882 - Receivables for insurance premiums collected on behalf of domestic accepting reinsurers;

- Account 13883 - Receivables for insurance premiums collected on behalf of foreign accepting reinsurers;

- Account 13888 - Other receivables.

Supplement the structure and content reflected in Account 138 - Other Receivables as follows:

Debit Side:

- Receivables for insurance premiums collected from policyholders for insurance companies;

- Receivables for insurance premiums collected from ceding reinsurers for accepting reinsurers;

- Increase the amount of receivables for insurance premiums collected from policyholders or ceding reinsurers due to an increase in the scope of insurance coverage leading to an increase in premiums.

Credit Side:

Amounts received regarding insurance premiums collected on behalf of insurance companies or accepting reinsurers;

- Decrease the amount of receivables for insurance premiums collected due to a decrease in the scope of insurance coverage leading to a decrease in premiums.

+ Decrease the amount of receivables for insurance premiums collected when policyholders or insurance companies cancel insurance contracts;

+ Decrease the amount of insurance premiums collected from policyholders for insurance companies, and from ceding reinsurers for accepting reinsurers when there is a decision to write off receivables for insurance premiums collected.

Debit Balance:

Unreceived insurance premiums collected.

1.2. Account 338 - "Other Payables": Reflects additional payables to insurance companies for insurance premiums collected from customers and payables to accepting reinsurers for insurance premiums collected from ceding reinsurers.

Supplement four third-level accounts under Account 3388 - "Other Payables" as follows:

- Account 33881 - Payables for insurance premiums collected on behalf of insurance companies:Reflects payables for insurance premiums collected on behalf of insurance companies and the settlement status of such premiums.

- Account 33882 - Payables for insurance premiums collected on behalf of domestic accepting reinsurers:Reflects payables for insurance premiums collected on behalf of domestic accepting reinsurers and the settlement status of such premiums.

- Account 33883 - Payables for insurance premiums collected on behalf of foreign accepting reinsurers:Reflects payables for insurance premiums collected on behalf of foreign accepting reinsurers and the settlement status of such premiums.

- Account 33888 - Other Payables:Reflects other payables of the entity outside the contents already reflected in Accounts 3381 to 3387 and Account 3389.

Supplement the structure and content reflected in Account 338 - Other Payables as follows:

Debit Side:

- Transfer the amount of receivables for commission income from insurance brokerage transactions deducted from the amount of payables for insurance premiums collected on behalf of insurance companies or accepting reinsurers;

- Decrease the amount of payables for insurance premiums collected due to a decrease in the scope of insurance coverage leading to a decrease in premiums;

- Decrease the amount of payables for insurance premiums collected when policyholders or insurance companies cancel insurance contracts;

- Decrease the amount of payables for insurance premiums collected when insurance companies or accepting reinsurers decide to write off receivables for insurance premiums collected from policyholders according to regulations;

- Payment of insurance premiums collected on behalf of insurance companies and accepting reinsurers.

Credit Side:

Payables for insurance premiums collected from customers for insurance companies;

Payables for insurance premiums collected from ceding reinsurers for accepting reinsurers;

- Clauses payable for insurance premiums collected on behalf of customers or from reinsurers due to an increase in the scope of insurance coverage leading to higher premiums.

Debit balance:

Clauses payable for insurance premiums collected on behalf of others.

1.3. Add Account 416 - "Compulsory Reserve Fund".

This account is used to reflect the current balance and the establishment and utilization of the Compulsory Reserve Fund of the insurance brokerage business.

The Compulsory Reserve Fund is established from post-tax profit.

The establishment and utilization of the Compulsory Reserve Fund shall be carried out in accordance with the financial regulations applicable to insurance brokerage businesses.

Structure and content reflected in Account 416 - Compulsory Reserve Fund:

Debit Side:

Decrease in the amount of the Compulsory Reserve Fund due to the utilization of the Compulsory Reserve Fund according to financial regulations.

Credit Side:

Increase in the amount of the Compulsory Reserve Fund due to annual contributions.

Debit balance:

Current balance of the Compulsory Reserve Fund at the end of the period.

1.4. Amend the second-level Accounts under Account 511 - "Revenue from Sales and Service Provision". Account 511 includes three second-level accounts as follows:

- Account 5111 - Commission Revenue from Insurance Brokerage;

- Account 5113 - Revenue from Advisory Services;

- Account 5118 - Other Revenue.

1.5. Rename Account 531 - "Returned Goods" to "Refund of Insurance Brokerage Commissions".

1.6. Rename Account 532 - "Discounts on Sales" to "Discounts on Insurance Brokerage Commissions".

1.7. Add Account 624 - "Direct Operating Costs of Insurance Brokerage Business". This account includes four second-level accounts as follows:

- Account 6241 - Brokerage Costs;

- Account 6242 - Cost of Purchasing Professional Liability Insurance;

- Account 6243 - Costs of Advisory Services Activities;

- Account 6248 - Other Costs.

2. Do not use some Accounting Accounts below:

2.1. Do not use the following Accounts in the Balance Sheet:

- Account 1385 - Receivables for Corporate Restructuring;

- Account 154 - Work-in-Progress Production and Operating Costs;

- Account 155 - Finished Products;

- Account 156 - Inventory;

- Account 157 - Goods Sent for Sale;

- Account 158 - Taxed Inventory;

- Account 161 - Public Welfare Expenditure;

- Account 2147 - Depreciation of Investment Real Estate;

- Account 217 - Investment Real Estate;

- Account 337 - Advance Payment for Construction Contract;

- Account 3385 - Payables for Corporate Restructuring;

- Account 417 - Enterprise Restructuring Support Fund;

- Account 461 - Public Welfare Revenue;

- Account 466 - Capitalized Public Welfare Revenue;

- Account 5114 - Subsidy Revenue;

- Account 5117 - Revenue from Investment Real Estate Operations;

- Account 512 - Internal Sales Revenue;

- Account 521 - Trade Discounts;

- Account 611 - Purchases;

- Account 621 - Direct Material and Consumable Costs;

- Account 622 - Direct Labor Costs;

- Account 623 - Machinery Usage Costs;

- Account 627 - Common Production Costs;

- Account 631 - Production Cost;

- Account 641 - Selling Expenses.

2.2. Do not use the following Accounts outside the Balance Sheet:

- Account 003 - Goods Received for Sale, Storage, and Pledge;

- Account 008 - Public Welfare and Project Budget.

List of the Accounting System Accounts applicable to Insurance Brokerage Businesses as per Appendix No. 01 attached to this Circular.

Article 3. Accounting for the Mandatory Reserve Fund

The accounting for the Mandatory Reserve Fund shall use Account 416 - Mandatory Reserve Fund.

Methods of accounting for some main economic transactions:

1. At the end of the fiscal year, determine the amount of the Mandatory Reserve Fund to be established according to the financial regulations, record:

Debit account 421 - Undistributed profits

Credit Account 416 - Mandatory Reserve Fund.

2. When using the Mandatory Reserve Fund, record:

Debit Account 416 - Mandatory Reserve Fund

Credit relevant accounts.

Article 4. Accounting for Sales Revenue and Service Revenue

Accounting for sales revenue and service revenue shall use Account 511 - Sales Revenue and Service Revenue.

This account is used to reflect commission income from brokerage services, service provision income, and other income of insurance brokerage enterprises.

1. Principles of accounting for this account:

1.1. Time of recognizing commission income from brokerage services of insurance brokerage enterprises:

The time of recognizing commission income from brokerage services is when the insurance contract becomes effective and all related documents and files concerning the insurance contract have been completed. Insurance brokerage enterprises recognize commission income regardless of whether the money has been received or not.

1.2. Insurance brokerage enterprises must track in detail the commission income from brokerage services collected from insurance companies and reinsurers to meet management requirements.

1.3. Pure service revenue from insurance brokerage services that the enterprise achieves during the accounting period may be lower than the initially recognized sales revenue and service revenue due to reasons such as refunding commissions or reducing commissions.

1.4. Commission income from brokerage services may increase or decrease when adjusting insurance contracts and brokerage contracts due to changes in the scope of insurance coverage by customers. In cases where expanding the scope of insurance increases premiums leading to increased commission income from brokerage services, accounting entries are made with Debit Accounts 112, 131,... and Credit Account 5111; In cases where reducing the scope of insurance decreases premium income leading to decreased commission income from brokerage services, accounting entries are made with Debit Account 5111 and Credit Accounts 111, 112, 131,...

1.5. Refunds of brokerage commissions or reductions in brokerage commissions are deductions from revenue and are tracked separately on Accounts 531 "Refunds of Brokerage Commissions" and Account 532 "Reduction of Brokerage Commissions," which are transferred at the end of the period to Account 511 to calculate net revenue.

2. Account 511 - Sales Revenue and Service Revenue, has three second-level accounts:

- Account 5111 - Brokerage Commission Income:Reflects the income and net income from brokerage activities within an accounting period of the enterprise.

Account 5111 has two third-level accounts:

+ Account 51111 - Original Brokerage Commission;

+ Account 51112 - Reinsurance Brokerage Commission.

- Account 5113 - Consulting Service Income:Reflects the income and net income from consulting services provided to customers within an accounting period.

Account 5113 is applied when the financial mechanism allows insurance brokerage enterprises to provide consulting services to customers and the amount received from consulting services does not fall within the insurance premium.

- Account 5118 - Other Income:This account is used to reflect other revenues outside those reflected in Accounts 5111 and 5113.

3. Methods of accounting for some main economic transactions:

3.1. When generating brokerage commission income from original insurance contracts between insurance companies and insured clients, record:

Debit Accounts 111, 112, 131,... (Total payment amount)

Credit Account 511 - Sales Revenue and Service Revenue

Credit Account 3331 - VAT Payable (33311) (if applicable).

3.2. When generating brokerage commission income from reinsurance contracts between ceding companies and reinsurers domestically or internationally, record:

Debit Accounts 111, 112, 131,...

Credit Account 511 - Sales Revenue and Service Revenue

3.3. In cases where customers change the scope of insurance coverage leading to changes in premiums and brokerage commission income, accounting entries are made as follows:

- In cases where expanding the scope of insurance coverage increases premiums leading to an increase in brokerage commission income, record:

Debit Accounts 111, 112, 131,... (Total payment amount)

Credit Account 511 - Sales Revenue and Service Revenue (5111)

Credit Account 3331 - VAT Payable (33311) (if applicable).

- In cases where reducing the scope of insurance coverage decreases premiums leading to a decrease in brokerage commission income, reverse the above journal entry:

Debit Account 511 - Sales Revenue and Service Revenue (5111)

Debit Account 3331 - VAT Payable (33311) (if applicable).

Credit Accounts 111, 112, 131 ...

3.4. At the end of the accounting period, transfer the refunds of brokerage commissions generated during the period to reduce actual revenue for the period to determine net revenue, record:

Debit Account 511 - Sales Revenue and Service Revenue

Credit Account 531 - Refunds of Brokerage Commissions

3.5. At the end of the accounting period, transfer the reduction of brokerage commissions generated during the period to reduce actual revenue for the period to determine net revenue, record:

Debit Account 511 - Sales Revenue and Service Revenue

Credit Account 532 - Reduction of Brokerage Commissions

3.6. At the end of the accounting period, transfer net revenue to Account 911 "Determination of Business Results", record:

Debit Account 511 - Sales Revenue and Service Revenue

Credit account 911 - Determining business results.

Article 5. Accounting for Commission Refunds in Insurance Brokerage

The accounting reflects commission refunds for insurance brokerage using Account 531 - Commission Refunds for Insurance Brokerage.

This account is used to reflect commission amounts that must be refunded to insurance companies or reinsurers due to customers or insurance companies canceling insurance contracts, thus requiring the insurance company to return premiums and the insurance broker to refund commission to the insurance company or reinsurer. Commission refunds reflected on this account will adjust actual commission income from insurance brokerage during the reporting period to determine net revenue realized during the reporting period.

During the period, commission refunds are recorded on the Debit side of Account 531 "Commission Refunds for Insurance Brokerage". At the end of the period, the total value of commission refunds is transferred to the sales revenue and service provision account to determine net revenue for the reporting period.

Structure and Content of Account 531 - Commission Refunds for Insurance Brokerage

Debit Side:

Amounts of insurance brokerage commissions that must be refunded to insurance companies or reinsurers arising during the period.

Credit Side:

Transfer the amount of insurance brokerage commissions that must be refunded arising during the period to the Debit side of Account 511 "Sales Revenue and Service Provision" to determine net revenue for the reporting period.

Account 531 has no ending balance.

Methods of accounting for some main economic transactions:

1. When the insurance broker determines that insurance brokerage commissions must be refunded to the insurance company or reinsurer due to customers or the insurance company canceling insurance contracts, resulting in the insurance company returning premiums and the insurance broker returning commissions, record:

Debit Account 531 - Commission Refunds for Insurance Brokerage

Debit Account 3331 - VAT Payable (33311) (VAT amount of the refunded insurance brokerage commission, if applicable)

Credit Accounts 111, 112, 131, etc.

2. At the end of the accounting period, transfer the entire amount of commission refunds arising during the period to the sales revenue and service provision account, record:

Debit Account 511 - Sales Revenue and Service Revenue (5111)

Credit Account 531 - Commission Refunds for Insurance Brokerage.

Article 6. Accounting for Reduced Insurance Brokerage Commissions

Accounting for reduced insurance brokerage commissions uses Account 532 - Reduced Insurance Brokerage Commissions.

This account is used to reflect reduced insurance brokerage commissions due to the insurance broker having to refund the insurance company or reinsurer in cases where the insurance company or reinsurer reduces premiums due to payments at the end of the insurance contract when no accidents or losses occur, or due to maintaining long-term relationships with customers, or reducing for customers due to unfulfilled risk training commitments, or other commitments stipulated in the contract. Only reflect in this account reductions in insurance brokerage commissions outside the invoice after the contract ends, i.e., reductions in insurance commissions after invoices have been issued.

Do not reflect in Account 532 reductions in insurance brokerage commissions due to customers changing their scope of insurance participation, leading to reduced premiums and thus reduced insurance brokerage commission income.

During the period, reduced insurance brokerage commissions are recorded on the Debit side of Account 532 "Reduced Insurance Brokerage Commissions". At the end of the period, the total value of reduced insurance brokerage commissions is transferred to the sales revenue and service provision account to determine net revenue for the reporting period.

Structure and Content of Account 532 - Reduced Insurance Brokerage Commissions

Debit Side:

Reduced insurance brokerage commissions arising during the period.

Credit Side:

Transfer reduced insurance brokerage commissions arising during the period to Account 511 "Sales Revenue and Service Provision" to determine net revenue for the reporting period.

Account 532 has no ending balance.

Methods of accounting for some main economic transactions:

1. During the period, when reduced insurance brokerage commissions arise, record:

Debit Account 532 - Reduced Insurance Brokerage Commissions

Debit Account 3331 - VAT Payable (33311) (VAT amount of the reduced insurance brokerage commission) (if applicable)

Credit Accounts 111, 112, 131, etc.

2. At the end of the accounting period, transfer the entire amount of reduced insurance brokerage commissions arising during the period to the sales revenue and service provision account, record:

Debit Account 511 - Sales Revenue and Service Revenue (5111)

Credit Account 532 - Reduced Insurance Brokerage Commissions.

Article 7. Accounting for Direct Costs of Insurance Brokerage Business

Supplement Account 624 - Direct Costs of Insurance Brokerage Business.

This account is used to reflect direct costs of insurance brokerage business activities.

Principles of accounting for this account:

Only record into this account costs directly related to insurance brokerage business activities such as costs for individuals and organizations participating in insurance brokerage cooperation; amounts spent on purchasing professional liability insurance; costs for consulting services provided to the insured party in assessing risks, selecting types of insurance, insurance companies, where revenues from these consulting services do not fall within insurance premiums, and other costs related to implementing insurance brokerage contracts.

Structure and content reflected in Account 624 - Direct Costs of Insurance Brokerage Business.

Debit Side:

Direct costs incurred during the period for insurance brokerage business activities.

Credit Side:

- Amounts received are recorded to reduce brokerage business activity costs (if applicable);

- Transfer of direct costs of insurance brokerage business to Account 911 to determine business results.

Account 624 does not have an end-of-period balance.

Account 624 "Direct Costs of Insurance Brokerage Business" includes four sub-accounts:

- Sub-account 6241 - Cooperation Costs for Insurance Brokerage:Reflects costs for individuals and organizations participating in insurance brokerage cooperation,...

- Sub-account 6242 - Costs for Purchasing Professional Liability Insurance:Reflects costs that the enterprise must incur to purchase professional liability insurance for its insurance brokerage activities.

- Sub-account 6243 - Costs for Consulting Services Activities:Reflects costs for consulting services provided to the insured party in assessing risks, selecting types of insurance, conditions, terms, premium rates, and insurance companies,...

- Sub-account 6248 - Other Costs:Reflects other costs not covered by sub-accounts 6241, 6242, and 6243.

Methods of accounting for some main economic transactions:

When direct costs related to insurance brokerage activities and consulting services arise, record:

Debit Account 624 - Direct Costs of Insurance Brokerage Business

Debit Account 133 - VAT Deductible Tax (if deductible)

Credit Accounts 111, 112, 331,...

When direct costs payable to domestic and foreign enterprises participating in insurance brokerage cooperation arise, record:

Debit Account 624 - Direct Costs of Insurance Brokerage Business

Debit Account 133 - VAT Deductible Tax (if deductible)

Credit Account 3338 - Other Payables, Other Payments (detailing withholding tax)

Credit Accounts 111, 112, 331 (costs payable to enterprises participating in insurance brokerage cooperation).

Periodically when purchasing professional liability insurance, record:

Debit Account 624 - Direct Costs of Insurance Brokerage Business

Debit Account 133 - Deductible VAT (if applicable)

Credit Accounts 111, 112,...

When prepaying for professional liability insurance, record:

Debit Account 624 - Direct Costs of Insurance Brokerage Business

Credit Account 335 - Expenses Payable.

- When paying for professional liability insurance, record:

Debit Account 335 - Expenses Payable

Debit Account 133 - Deductible VAT (if applicable)

Credit Accounts 111, 112.

When prepaying for professional liability insurance for multiple accounting periods, record:

Debit Accounts 142, 242

Debit Account 133 - Deductible VAT (if applicable)

Credit Accounts 111, 112

Periodically, allocate to costs, record:

Debit Account 624 - Direct Costs of Insurance Brokerage Business

Credit Account 142 - Short-term Prepaid Expenses

Credit Account 242 - Long-term Prepaid Expenses.

When there are amounts received to reduce direct costs, record:

Debit Accounts 111, 112,...

Credit Account 624 - Direct Costs of Insurance Brokerage Business.

At the end of the accounting period, transfer direct costs of insurance brokerage business to the debit side of Account 911 to determine business results, record:

Debit account 911 - Determining business results

Credit Account 624 - Direct Costs of Insurance Brokerage Business

Article 8. Accounting methods for certain main economic activities

1. Accounting for brokerage activities related to original insurance contracts between insurance enterprises and policyholders

1.1. In cases where the insurance brokerage enterprise does not collect insurance premiums on behalf of the insurance enterprise from the policyholder

- When revenue from the brokerage contract between the insurance enterprise and the policyholder occurs, the accounting records recognize the brokerage commission revenue:

Debit Accounts 111, 112 (Total payment amount) (In case of receiving brokerage commission from the insurance enterprise)

Debit Account 131 - Amounts Receivable from Customers (In case of not yet receiving brokerage commission from the insurance enterprise)

Credit Account 511 - Sales Revenue and Service Revenue (5111)

Credit Account 3331 - VAT Payable (33311) (if applicable).

- In cases where expanding the scope of insurance coverage increases premiums leading to an increase in brokerage commission income, record:

Debit Accounts 111, 112, 131,... (Total payment amount)

Credit Account 511 - Sales Revenue and Service Revenue (5111)

Credit Account 3331 - VAT Payable (33311) (if applicable).

- In cases where the scope of insurance coverage decreases, leading to a reduction in insurance premiums and thus a decrease in brokerage commission revenue, record:

Debit Account 511 - Sales Revenue and Service Revenue (5111)

Debit Account 3331 - Value Added Tax Payable (33311) (if applicable)

Credit Accounts 111, 112, 131, etc.

1.2. In cases where the insurance brokerage enterprise collects insurance premiums on behalf of the insurance enterprise from the policyholder

- Reflecting the brokerage commission receivable from the insurance enterprise, record:

Debit Accounts 111, 112 (Total payment amount) (In case of receiving brokerage commission from the insurance enterprise)

Debit Account 131 - Amounts Receivable from Customers (In case of not yet receiving brokerage commission from the insurance enterprise) (Details of the insurance enterprise)

Credit Account 511 - Sales Revenue and Service Revenue (5111)

Credit Account 3331 - VAT Payable (33311) (if applicable).

- Reflecting the amount of insurance premium that the insurance brokerage enterprise must collect on behalf of the policyholder and pay to the insurance enterprise, record:

Debit Account 138 - Other Receivables (1388) (Details of the insurance premium collected on behalf of the policyholder for the insurance enterprise)

Credit Account 338 - Other Payables and Taxes Payable (33881) (Details payable to the insurance enterprise regarding the insurance premium collected on behalf)

- Reflecting an increase in receivables and payables regarding the insurance premium collected on behalf when the scope of insurance increases, leading to an increase in insurance premiums, record:

Debit Account 138 - Other Receivables (1388) (Details of the insurance premium collected on behalf of the policyholder for the insurance enterprise)

Credit Account 338 - Other Payables and Taxes Payable (33881) (Details payable to the insurance enterprise regarding the insurance premium collected on behalf)

Simultaneously reflecting an increase in brokerage commission revenue, record:

Debit Accounts 111, 112, 131,... (Total payment amount)

Credit Account 511 - Sales Revenue and Service Revenue (5111)

Credit Account 3331 - Value Added Tax Payable (33311) (if applicable)

- Reflecting a decrease in receivables and payables regarding the insurance premium collected on behalf when the scope of insurance decreases, leading to a decrease in insurance premiums, record:

Debit Account 338 - Other Payables and Taxes Payable (33881) (Details payable to the insurance enterprise regarding the insurance premium collected on behalf)

Credit Account 138 - Other Receivables (1388) (Details of the insurance premium collected on behalf of the policyholder for the insurance enterprise)

Simultaneously reflecting a decrease in brokerage commission revenue, record:

Debit Account 511 - Sales Revenue and Service Revenue (5111)

Debit Account 3331 - Value Added Tax Payable (33311) (if applicable)

Credit various Accounts 111, 112, 131, etc. (Total settlement price)

- When the insurance brokerage enterprise receives the insurance premium from the policyholder for the insurance enterprise, record:

Debit Accounts 111, 112

Credit Account 138 - Other Receivables (1388) (Details of the insurance premium collected on behalf of the policyholder for the insurance enterprise).

- When the insurance brokerage enterprise determines the brokerage commission revenue to be deducted from the amount payable regarding the insurance premium already collected on behalf of the insurance enterprise (including VAT), the accounting records reflect:

Debit Account 338 - Other Payables and Taxes Payable (Details payable to the insurance enterprise regarding the insurance premium collected on behalf) (33881)

Credit Account 131 - Amounts Receivable from Customers (Details of the insurance enterprise)

- When paying the insurance premium collected on behalf of the policyholder to the insurance enterprise, record:

Debit Account 338 - Other Payables and Taxes Payable (Details payable to the insurance enterprise regarding the insurance premium collected on behalf of the policyholder) (33881)

Credit accounts 111, 112...

- In cases where the policyholder or the insurance enterprise cancels the insurance contract with the insurance enterprise, the insurance brokerage enterprise must refund the brokerage commission to the insurance enterprise based on the notification from the insurance enterprise and relevant documents, the accounting records reflect a decrease in brokerage commission revenue:

Debit Account 531 - Commission Refunds for Insurance Brokerage

Debit Account 3331 - Value Added Tax Payable (33311) (if applicable)

Credit various Accounts 111, 112, 131.

Simultaneously reflecting a decrease in the insurance premium payable on behalf of the policyholder to the insurance enterprise:

Debit Account 338 - Other Payables and Taxes Payable (Details payable to the insurance enterprise regarding the insurance premium collected on behalf of the policyholder) (33881)

Credit Account 138 - Other Receivables (Details of the insurance premium collected on behalf of the policyholder for the insurance enterprise).

- When the insurance enterprise decides to write off the receivable for insurance premiums from policyholders according to regulations, based on the notification of write-off from the insurance enterprise and relevant documents, the accounting records reflect a decrease in the insurance premium payable on behalf of the policyholder to the insurance enterprise:

Debit Account 338 - Other Payables and Taxes Payable (Details payable to the insurance enterprise regarding the insurance premium collected on behalf of the policyholder) (33881)

Credit Account 138 - Other Receivables (Details of the insurance premium collected on behalf of the policyholder for the insurance enterprise).

2. Accounting for brokerage activities related to reinsurance contracts between the ceding insurer and the reinsurer within the country or abroad

2.1. In cases where the insurance brokerage enterprise does not collect reinsurance premiums on behalf of the ceding insurer from the reinsurer within the country or abroad

- When revenue from the brokerage commission between the ceding insurer and the reinsurer within the country or abroad occurs, the accounting records recognize the brokerage commission revenue:

Debit various Accounts 111, 112 (Total amount of brokerage commission) (In case of receiving brokerage commission from the reinsurer) (Details of the reinsurer)

Debit Account 131 - Amounts Receivable from Customers (Total amount of brokerage commission) (In case of not yet receiving brokerage commission from the reinsurer) (Details of the reinsurer)

Credit Account 511 - Revenue from Sales and Services (5111).

- Increasing or decreasing brokerage commission revenue due to changes in the scope of insurance coverage leading to changes in insurance premiums, the accounting is similar to Section 1.2 of Article 8 of this Circular.

2.2. In cases where the insurance brokerage enterprise collects reinsurance premiums on behalf of the ceding insurer from the reinsurer within the country or abroad.

- Reflecting the brokerage commission receivable from the reinsurer by the insurance brokerage enterprise, record:

Debit various Accounts 111, 112 (In case of receiving brokerage commission from the reinsurer)

Debit Account 131 - Amounts Receivable from Customers (In case of not yet receiving brokerage commission from the reinsurer) (Details of the reinsurer)

Credit Account 511 - Revenue from Sales and Services (5111).

- The accounting reflects the amount of reinsurance premium that the insurance brokerage enterprise must collect on behalf of the ceding insurer and pay to the reinsurer, record:

In the case where an insurance brokerage enterprise collects insurance premiums on behalf of the ceding reinsurer for the domestic accepting reinsurer, the accounting reflects the amount of the premium collected on behalf of the ceding reinsurer that must be paid to the domestic accepting reinsurer, recorded as follows:

Debit Account 138 - Other Receivables (1388) (Details of premiums collected on behalf of the ceding reinsurer for the domestic accepting reinsurer)

Credit Account 338 - Other Payables and Taxes Payable (33882) (Details of payables regarding premiums collected on behalf of the domestic accepting reinsurer)

In the case where an insurance brokerage enterprise collects insurance premiums on behalf of the ceding reinsurer for the foreign accepting reinsurer, the accounting reflects the amount of the premium collected on behalf of the ceding reinsurer that must be paid to the foreign accepting reinsurer and the withholding tax payable, recorded as follows:

Debit Account 138 - Other Receivables (1388) (Details of premiums collected on behalf of the ceding reinsurer for the foreign accepting reinsurer) (Including premiums collected and withholding tax)

Credit Account 338 - Other Payables and Taxes Payable (33883) (Details of payables regarding premiums collected on behalf of the foreign accepting reinsurer).

Credit Account 3338 - Other Taxes (Details of withholding tax payable)

When the insurance brokerage enterprise pays the withholding tax on behalf of the foreign accepting reinsurer to the state budget, it records as follows:

Debit Account 3338 - Other Taxes (Details of withholding tax payable)

Credit Accounts 111, 112.

When the insurance brokerage enterprise receives insurance premiums from the ceding reinsurer for the accepting reinsurer, it records as follows:

Debit Accounts 111, 112

Credit Account 138 - Other Receivables (1388) (Details of premiums collected on behalf of the ceding reinsurer for the accepting reinsurer).

At the end of the month or accounting period, when the insurance brokerage enterprise determines the commission income from brokerage activities that can be offset against the amounts due for premiums collected on behalf of the accepting reinsurer, it records as follows:

Debit Account 338 - Other Payables and Taxes Payable (33882, 33883) (Details of payables regarding premiums collected on behalf of the accepting reinsurer).

Credit Account 131 - Customer Receivables (Details of the accepting reinsurer).

When paying the collected premiums on behalf of the ceding reinsurer to the accepting reinsurer, the accounting records as follows:

Debit Account 338 - Other Payables and Taxes Payable (33882, 33883) (Details of payables regarding premiums collected on behalf of the accepting reinsurer).

Credit Accounts 111, 112.

In the event that the client or the ceding reinsurer cancels the insurance contract, leading the insurer to cancel the reinsurance premium transfer contract and the insurance brokerage enterprise to refund the commission to the accepting reinsurer based on the notification from the accepting reinsurer and related documents, the accounting reduces the commission income from brokerage activities:

Debit Account 531 - Commission Refunds for Insurance Brokerage

Credit various Accounts 111, 112, 131.

Simultaneously, it reduces the amount of premiums collected on behalf of the ceding reinsurer for the accepting reinsurer:

Debit Account 338 - Other Payables and Taxes Payable (33882, 33883) (Details of payables regarding premiums collected on behalf of the accepting reinsurer).

Credit Account 138 - Other Receivables (1388) (Details of premiums collected on behalf of the ceding reinsurer for the accepting reinsurer).

When the accepting reinsurer decides to write off receivables from the ceding reinsurer according to regulations, based on the notification of debt write-off from the accepting reinsurer and related documents, the accounting reduces the amount of premiums collected on behalf of the ceding reinsurer for the accepting reinsurer:

Debit Account 338 - Other Payables and Taxes Payable (33882, 33883) (Details of payables regarding premiums collected on behalf of the accepting reinsurer).

Credit Account 138 - Other Receivables (1388) (Details of premiums collected on behalf of the ceding reinsurer for the accepting reinsurer).

3. Accounting for cooperative brokerage activities:

3.1. Accounting for cooperative brokerage activities arising within an insurance brokerage group:

3.1.1. In the case where a domestic insurance brokerage enterprise enters into a brokerage contract, collects brokerage fees, and pays part of the brokerage fee to a foreign insurance brokerage enterprise:

a) General provisions:

- The domestic insurance brokerage enterprise directly signs a brokerage contract with the insurer or the accepting reinsurer. The domestic insurance brokerage enterprise and the foreign insurance brokerage enterprise will sign a cooperation agreement detailing specific terms for each party. In this case, the domestic insurance brokerage enterprise records all commission income generated from the brokerage contract. The amount the domestic insurance brokerage enterprise pays to the foreign insurance brokerage enterprise according to the cooperation agreement is recorded as expenses.

- The domestic insurance brokerage enterprise is responsible for deducting the withholding tax due from the foreign insurance brokerage enterprise and remitting it to the Vietnamese state budget in accordance with the law on withholding tax.

b) Accounting for specific transactions:

- When revenue from a brokerage contract between the domestic insurance brokerage enterprise and the insurer or accepting reinsurer arises, the accounting reflects the total commission income from the brokerage contract receivable from the insurer or accepting reinsurer, recorded as follows:

Debit Accounts 111, 112 (Details of the insurer or accepting reinsurer) (In the case of receiving brokerage commission)

Debit Account 131 - Customer Receivables (Details of the insurer or accepting reinsurer) (In the case of not yet receiving brokerage commission)

Credit Account 511 - Sales Revenue and Service Revenue (5111)

Credit Account 3331 - VAT Payable (33311) (If VAT is payable).

- The insurance brokerage enterprise determines the amount payable to the cooperating foreign insurance brokerage enterprise, the accounting records as follows:

Debit Account 624 - Direct Expenses for Insurance Brokerage Business (6241)

Credit Account 331 - Payable to Seller (Details of the foreign insurance brokerage enterprise)

Credit Account 3338 - Other Taxes (Details of withholding tax).

- When the domestic insurance brokerage enterprise pays the foreign insurance brokerage enterprise (after deducting the withholding tax paid on behalf of the foreign insurance brokerage enterprise), the accounting records as follows:

Debit Account 331 - Payable to Seller (Details of the foreign insurance brokerage enterprise)

Credit Account 112 - Bank Deposits.

3.1.2. In the case where a foreign insurance brokerage enterprise enters into a brokerage contract, collects brokerage fees, and pays part of the commission to a domestic insurance brokerage enterprise

When a domestic insurance brokerage company determines the receivable insurance brokerage revenue of a foreign insurance brokerage company from cooperative brokerage activities within an insurance group according to the cooperation agreement, the accounting of the domestic insurance brokerage company when receiving cooperative brokerage commission revenue:

Debit accounts 111, 112, 131

Credit Account 511 - Sales Revenue and Service Revenue (5111)

Debit Account 333 - Taxes and State Levies Payable (if applicable) (Details of tax payable).

3.2. Accounting for cooperative brokerage activities occurring between domestic insurance brokerage companies:

In the case where domestic insurance brokerage companies cooperate together to broker one insurance contract; wherein an agreement is made for one insurance brokerage company to act as the lead party to sign the brokerage contract, collect brokerage fees, and pay a portion of the brokerage fee to another domestic cooperative insurance brokerage company.

- When revenue from the brokerage contract between the domestic insurance brokerage company and the insurance company or the reinsurer is generated, the accounting at the domestic insurance brokerage company acting as the lead party to sign the brokerage contract reflects the total receivable brokerage commission revenue according to the brokerage contract with the insurance company or the reinsurer, recorded as follows:

Debit Accounts 111, 112 (Details of the insurer or accepting reinsurer) (In the case of receiving brokerage commission)

Debit Account 131 - Customer Receivables (Details of the insurer or accepting reinsurer) (In the case of not yet receiving brokerage commission)

Credit Account 511 - Sales Revenue and Service Revenue (5111)

Credit Account 3331 - VAT Payable (33311) (If VAT is payable).

- When the domestic insurance brokerage company acting as the lead party to sign the Brokerage Contract determines the amount of brokerage fee to be paid to the domestic cooperative insurance brokerage company, the accountant records:

Debit Account 624 - Direct Expenses for Insurance Brokerage Business (6241)

Credit Account 331 - Amounts Payable to Sellers (Details of domestic insurance brokerage company).

- When the domestic insurance brokerage company acting as the lead party to sign the Brokerage Contract pays the brokerage fee to the domestic cooperative insurance brokerage company, the accountant records:

Debit Account 331 - Amounts Payable to Sellers (Details of domestic insurance brokerage company)

Credit Accounts 111, 112.

Article 9. Annual Financial Reporting System and Interim Financial Reports.

1. Annual Financial Report

The annual financial reporting system applicable to Insurance Brokerage Companies includes the following four financial statements:

2. Interim Financial Reports

Insurance Brokerage Companies must prepare four full interim financial statements as follows:

Article 10. Forms of Financial Statements Applicable to Insurance Brokerage Companies

1. Annual Financial Statement Forms(See Appendix No. 02)

2. Interim Financial Statement Forms(See Appendix No. 03)

The indicators in each full interim financial statement are similar to those in the annual financial statements issued under this Circular.

Article 11. Content and Methodology for Preparing Financial Statements

1. Content and methodology for preparing the Balance Sheet (Form Number B 01 - INS) (See Appendix 02).

This Circular guides the content and methodology for preparing indicators related to the specific characteristics of insurance brokerage companies. Other indicators (account items), enterprises shall implement according to the current enterprise accounting regulations (Enterprise Accounting Regulations issued pursuant to Decision No. 15/2006/QĐ-BTC dated March 20, 2006 of the Ministry of Finance and Circulars guiding amendments and supplements to the Enterprise Accounting Regulations).

- The figures entered in column 5 "Beginning of Year" of this report this year are based on the figures recorded in column 4 "End of Year" of each indicator of this report last year;

- The figures entered in column 4 "End of Year" of this report at the end of the accounting period of the year are guided as follows:

Accounts Receivable from Customers (Account Code 131)

This indicator reflects the amount still to be collected from insurance companies, reinsurers, and other customers with payment terms of less than one year at the reporting date. The figures to be recorded in the "Accounts Receivable from Customers" indicator are based on the total debit balance details of Account 131 "Accounts Receivable from Customers" opened separately for each customer on the detailed ledger of Account 131, detailing short-term receivables from customers.

Other Receivables (Account Code 135)

This indicator reflects receivables for insurance premiums collected on behalf of the original insurer, reinsurer, and other receivables from related parties at the reporting date. The figures to be recorded in the "Other Receivables" indicator are the total debit balances of Accounts: TK1388, TK334, TK338 on the detailed ledger of Accounts 1388, 334, 338, detailing short-term receivables.

Long-term Receivables from Customers (Account Code 211)

This indicator reflects the amount still to be collected from insurance companies, reinsurers, and other customers classified as long-term assets at the reporting date. The figures to be recorded in the "Long-term Receivables from Customers" indicator are based on the debit balance details of Account 131 "Accounts Receivable from Customers", opened separately for each customer for receivables classified as long-term assets.

Other Long-term Receivables (Account Code 218)

Reflects receivables for insurance premiums collected on behalf of the original insurer, reinsurer, and other receivables from related parties classified as long-term assets, long-term deposits, long-term pledges, and long-term advances to sellers (if any). The figures to be recorded in the "Other Long-term Receivables" indicator are the debit balance details of Accounts 138, 244, 331, 338 (details of other long-term receivables) on the detailed ledger of Accounts 1388, 244, 331, 338.

Amounts Payable to Sellers (Account Code 312)

Reflects the amount payable to individuals and organizations participating in insurance brokerage, payable for purchasing professional liability insurance, and other sellers with payment terms of less than one year or one business cycle at the reporting date. The figures to be recorded in the "Amounts Payable to Sellers" indicator are the credit balance details of Account 331 "Amounts Payable to Sellers" classified as short-term, opened separately for each seller on the detailed ledger of Account 331.

Taxes and other amounts payable to the State (Code 314)

Reflects the total amount that enterprises must pay to the State at the reporting date, including taxes (including contractor taxes), fees, charges, and other amounts. The data for the "Taxes and other amounts payable to the State" indicator is the credit balance detail of Account 333 "Taxes and other amounts payable to the State" on the detailed accounting ledger of Account 333.

Other short-term liabilities and payments due (Code 319)

Reflects other short-term liabilities and payments due regarding insurance premiums collected on behalf of the original insurer, reinsurer enterprises, and other liabilities not reflected in the above indicators, such as: excess asset value discovered but not yet identified, to be paid to the Social Insurance Authority, etc. The data for the "Other short-term liabilities and payments due" indicator is the total credit balance of Accounts 338 "Other liabilities and payments due", Account 138 "Other receivables" on the detailed accounting ledger of Accounts 338, 138 (excluding other liabilities and payments due classified as long-term debts).

Other long-term liabilities (Code 333)

This indicator reflects long-term liabilities regarding insurance premiums collected on behalf of the original insurer, reinsurer enterprises, and other liabilities such as: the amount received as long-term collateral or pledge from other units at the reporting date. The data for the "Other long-term liabilities" indicator is the total credit balance detail of Account 338 "Other liabilities and payments due" and Account 344 "Long-term collateral and pledges received" on the general ledger of Account 344 and the detailed ledger of Account 338 (detail of long-term liabilities).

Mandatory reserve fund (Code 423)

This indicator reflects the mandatory reserve fund not utilized at the reporting date. The data for the "Mandatory reserve fund" indicator is the credit balance of Account 416 - "Mandatory reserve fund" on the general ledger of Account 416.

2. Content and method of preparing the Business Operation Results Report (Form B 02 - DNMG)

This Circular guides the content and method of preparing the indicators (items) with amendments and supplements to record data in Column 4 "This Year" of this report this year. Indicators (items) without amendments and supplements are prepared according to the current enterprise accounting system (Enterprise Accounting System issued pursuant to Decision No. 15/2006/QĐ-BTC of March 20, 2006 of the Ministry of Finance and Circulars guiding amendments and supplements to the Enterprise Accounting System).

- Data recorded in Column 5 "Last Year" of this report this year is based on the data recorded in Column 4 "This Year" of each corresponding indicator of this report last year.

- Content and method of preparing the indicators recorded in Column 4 "This Year" are as follows:

Revenue from sales and service provision (Code 01)

This indicator reflects the total revenue from insurance brokerage commissions, advisory services, and other revenues in the reporting year of the insurance brokerage enterprise.

The data for this indicator is the cumulative debit occurrence of Account 511 "Revenue from sales and service provision" in the reporting year on the ledger of Account 511.

Deductions from revenue (Code 02)

This indicator reflects the total deductions from gross revenue in the year, including: refunding insurance brokerage commissions and reducing insurance brokerage commissions.

The data for this indicator is the cumulative debit occurrence of Account 511 "Revenue from sales and service provision" corresponding to the credit of Accounts 111, 112, 131 (in cases where the scope of insurance coverage changes leading to reduced premiums and thus reduced insurance brokerage commissions), Account 531 "Refunding insurance brokerage commissions," and Account 532 "Reducing insurance brokerage commissions" during the reporting period on the ledger of Accounts 111, 112, 131, 511, 531, 532.

Net revenue from sales and service provision (Code 10)

This indicator reflects net revenue from sales and service provision after deducting revenue deductions in the reporting year.

Code 10 = Code 01 – Code 02

Cost of goods sold (Code 11)

This indicator reflects the total direct operating costs of insurance brokerage and other costs included in the cost of goods sold or reducing the cost of goods sold during the reporting period.

The data for this indicator is the cumulative credit occurrence of Account 624 "Direct operating costs of insurance brokerage" and Account 632 "Cost of goods sold" during the reporting period corresponding to the debit of Account 911 "Determination of operating results" on the ledger of Accounts 624, 632, 911.

Gross profit from sales and service provision (Code 20)

This indicator reflects the difference between net revenue from sales and service provision and the cost of goods sold arising during the reporting period.

Code 20 = Code 10 – Code 11

3. Content and method of preparing the Financial Statement Notes (Form B 09-DNMG)

This Circular supplements some contents of the Financial Statement Notes to be appropriate for insurance brokerage enterprises. Indicators (items) without amendments and supplements are prepared according to the current enterprise accounting system (Enterprise Accounting System issued pursuant to Decision No. 15/2006/QĐ-BTC of March 20, 2006 of the Ministry of Finance and Circulars guiding amendments and supplements to the Enterprise Accounting System).

At Section V - Additional information for items presented in the Balance Sheet with amendments and supplements, the following contents are added:

- At Point 03 - Other short-term receivables: supplement explanatory indicators for short-term receivables regarding insurance premiums collected on behalf of insurers, domestic and foreign reinsurers.

- At Point 07 - Other long-term receivables: supplement explanatory indicators for long-term receivables regarding insurance premiums collected on behalf of insurers, domestic and foreign reinsurers.

- At Point 16 - Taxes and other amounts payable to the State: supplement explanatory indicators for contractor taxes.

- At Point 18 - Other short-term liabilities and payments due: supplement explanatory indicators for short-term liabilities regarding insurance premiums collected on behalf of insurers, domestic and foreign reinsurers.

||| - Add Point 19b - Other long-term liabilities to reflect long-term received deposits and collateral; long-term agency collected insurance premium payable to insurance companies, domestic and foreign reinsurers.

||| In Section VI - Additional information for items presented in the business operation results report, some contents of the following points are amended and supplemented as follows:

||| Point 1 - Total revenue from sales and service provision: Among which, sales revenue is changed to commission revenue from insurance brokerage.

||| Point 2 - Deductions from revenue: Add: Insurance brokerage commission deduction; Insurance brokerage commission refund.

||| Point 3 - Net revenue from sales and service provision: Add net insurance brokerage commission revenue indicator.

||| Point 4 - Cost of goods sold: Add direct operating expenses of insurance brokerage, including: Insurance brokerage expenses; Professional liability insurance purchase costs; Costs of provided consulting services.

||| 4. Content and method of preparing the cash flow statement; content and method of preparing interim financial reports are implemented according to the current enterprise accounting system.||| (The enterprise accounting system issued pursuant to Decision No. 15/2006/QĐ-BTC dated March 20, 2006 of the Ministry of Finance and Circulars guiding amendments and supplements to the enterprise accounting system).

Article 12. Effective date and implementation

1. This Circular shall take effect 45 days from the date of signature.

||| 2. The Director of the Accounting System and Audit Department, the Director of the Insurance Supervision Management Department, the General Directors of insurance brokerage enterprises, and the Heads of related units are responsible for implementing this Circular.

||| 3. During the implementation of this Circular, if there are difficulties or obstacles, please report to the Ministry of Finance for study and resolution./.