Circular No. 206/2009/TT-BTC guiding accounting for transactions of reselling government bonds

CIRCULAR

Guidelines for accounting transactions of reselling government bonds

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Pursuant to the Accounting Law on June 17, 2003;

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 in business operations;

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;

The Ministry of Finance issues guidelines for accounting transactions of reselling government bonds as follows:

Article 1. Scope of Application

These guidelines apply to accounting transactions of reselling government bonds as prescribed in Decision No. 46/2008/QĐ-BTC dated July 1, 2008 of the Ministry of Finance on the issuance of regulations governing government bond trading transactions at the Hanoi Stock Exchange Center (now the Hanoi Securities Trading Corporation).

Article 2. Principles of accounting for reselling government bond transactions

Accounting for reselling government bond transactions must comply with the following principles:

2.1. Adhere strictly to the regulations regarding transaction forms, transaction deadlines, and income from government bonds in resale transactions as stipulated in the current financial mechanisms governing resale transactions of government bonds.

2.2. The buyer of government bonds under a resale contract shall not recognize the receipt of coupon payments from the seller as revenue at any time during the term of the resale transaction but shall record it as other payable accounts.

Article 3. Supplementing Account 171 – Resale Transactions of Government Bonds into Part One – List of Accounting Accounts for Enterprises issued pursuant to Decision No. 15/2006/QĐ-BTC dated March 20, 2006 of the Minister of Finance on the issuance of the Accounting System for Enterprises and Circular No. 95/2008/TT-BTC of the Ministry of Finance on Accounting Guidance for Securities Companies (Annex No. 01).

3.1. Account 171 – Resale Transactions of Government Bonds

This account is used to reflect resale transactions of government bonds that occur during the period.

This account records only the value of the resale contract of government bonds, excluding the coupon amounts received by the buyer on behalf of the seller during the term of the contract.

3.2. Structure and Content Reflected in Account 171 – Resale Transactions of Government Bonds

Debit Side:

- Value of government bonds repurchased by the seller upon expiration of the contract;

- Value of government bonds purchased by the buyer when the resale contract of government bonds becomes effective;

- Allocation of the difference between the resale price and the purchase price of government bonds according to the resale contract for the buyer;

Credit Side:

- Value of government bonds sold by the buyer according to the resale contract of government bonds upon expiration of the contract;

- Value of government bonds sold by the seller when the resale contract of government bonds becomes effective;

- Allocation of the difference between the sale price and the repurchase price of government bonds according to the resale contract for the seller.

Debit Balance:

Value of government bonds held by the buyer before the end of the term of the resale contract.

Debit balance:

Value of government bonds held by the seller before the end of the term of the resale contract.

3.3. Accounting Methods for Recording Certain Major Economic Activities:

3.3.1. Accounting for the Seller of Government Bonds Under a Resale Contract (Repo).

a. When the resale contract of government bonds becomes effective, record:

Debit various accounts 111, 112 (Amount according to the selling price)

Credit Account 171 – Resale Transactions of Government Bonds.

b. Periodically, the seller allocates the difference between the selling price and the repurchase price of government bonds under the resale contract to operating expenses, record:

Debit Account 631 – Operating Expenses (For securities companies), or

Debit Account 635 – Financial Expenses (For non-securities companies)

Credit Account 171 – Resale Transactions of Government Bonds.

(The allocation period should be consistent with the contract period)

c. Upon expiration of the term of the resale contract of government bonds, the company receives back the securities and pays the amount specified in the resale contract of government bonds, record:

Debit Account 171 – Resale Transactions of Government Bonds

Credit various accounts 111, 112 (According to the repurchase price specified in the contract).

d. When the buyer pays the seller the coupon amounts received on behalf of the seller during the term of the contract, the seller records:

Debit various accounts 111, 112, 138

Credit Account 511 – Revenue (For securities companies) (Coupon amount of the bond) or;

Credit Account 515 – Revenue from Financial Operations (For non-securities companies) (Coupon amount of the bond).

3.3.2. Accounting for the Buyer of Government Bonds Under a Resale Contract (Repo).

a. When the contract becomes effective, based on payment vouchers and other relevant documents, record:

Debit Account 171 – Resale Transactions of Government Bonds

Credit various accounts 111, 112 (Amount to be paid according to the purchase price).

b. Periodically, the buyer allocates the difference between the resale price and the purchase price of government bonds under the resale contract to revenue, record:

Debit Account 171 – Resale Transactions of Government Bonds

Credit Account 511 – Revenue (For securities companies) or;

Credit Account 515 – Revenue from Financial Operations (For non-securities companies).

(The allocation period should be consistent with the contract period).

c. Upon receiving the coupon payments of the bond from the seller during the term of the contract, record:

Debit various accounts 111, 112,...

Credit Account 338 - Other Payable Accounts (3388).

d. Upon expiration of the term of the resale contract of government bonds, the company returns the securities and receives the money according to the contract price, record:

Debit Accounts 111, 112

Credit Account 171 – Resale Transactions of Government Bonds.

At the same time, carry out procedures to repay the coupon payments of the bond received on behalf of the seller during the term of the contract, record:

Debit Account 338 - Other Payable Accounts

Credit various accounts 111, 112,...

Article 4. Supplement certain indicators to Part Two - The Financial Reporting System issued pursuant to Decision No. 15/2006/QĐ-BTC dated March 20, 2006 of the Minister of Finance on the issuance of Accounting Regulations for Enterprises and Circular No. 95/2008/TT-BTC of the Ministry of Finance guiding accounting applicable to Securities Companies (Appendix No. 02).

4.1. Supplement the indicator "Government Bond Repurchase Transactions" – Code 157 on the Balance Sheet. This indicator reflects the value of Government Bonds held by the buyer before the expiration of the repurchase agreement at the reporting date. The data recorded in the "Government Bond Repurchase Transactions" indicator is the debit balance of Account 171 – "Government Bond Repurchase Transactions" in the Accounting Ledger of Account 171.

4.2. Supplement the indicator "Government Bond Repurchase Transactions" – Code 327 on the Balance Sheet. This indicator reflects the value of Government Bonds held by the seller before the expiration of the repurchase agreement at the reporting date. The data recorded in the "Government Bond Repurchase Transactions" indicator is the credit balance of Account 171 – "Government Bond Repurchase Transactions" in the Accounting Ledger of Account 171.

Article 5. This Circular takes effect forty-five days from the date of signature.

Article 6. The Director of the Office, the Head of the Accounting and Auditing Department, the Chairman of the State Securities Commission, and the Heads of relevant units are responsible for implementing this Circular./.