Decision No. 20TC/KBNN on the issuance of procurement regulations for purchasing office supplies, equipment, and working tools for state agencies, armed forces, social organizations, and state-owned enterprises.

CIRCULAR

OF THE MINISTRY OF FINANCE NUMBER 20-TC/KBNN ON APRIL 25, 1997 GUIDING THE REGIME OF MANAGEMENT, ISSUE, AND PAYMENT OF NATIONAL TREASURY EXPENSES THROUGH STATE TREASURIES

Implementing Decree No. 87/CP dated December 19, 1996 of the Government detailing the division of management, preparation, implementation, and settlement of state budgets; the Ministry of Finance provides detailed guidance on the regime of management, issue, and payment of national treasury expenses through State Treasuries as follows:

I. GENERAL PROVISIONS:

1. All state budget expenditures must be inspected and supervised before, during, and after the issuance and payment process. Expenditures must be included in the approved state budget estimate, comply with regulations, standards, and quotas set by competent state agencies, and have been approved by the head of the entity using state budget funds.

2. All agencies, units, project leaders... utilizing state budget funds (hereinafter referred to collectively as entities using state budget funds) must open accounts at State Treasuries; they shall be subject to inspection and supervision by financial agencies and State Treasuries throughout the process of preparing estimates, allocating limits, issuing, paying, accounting, and settling state budgets.

3. The Ministry of Finance, Provincial Financial Departments under central cities, district and county financial departments under provinces, cities (hereinafter referred to collectively as financial agencies) are responsible for reviewing estimates and notifying quarterly funding limits to entities using state budget funds; inspecting the use of funds, examining and approving expenditure settlements of these entities, and compiling state budget expenditure settlements.

4. State Treasuries are responsible for supervising documents, vouchers, conditions for expenditures, and promptly implementing issuance and payment of state budget expenditures according to regulations; participating with financial agencies and competent state management agencies in inspecting the use of state budgets and confirming actual state budget expenditures processed through State Treasuries by entities.

State Treasuries have the right to temporarily suspend, refuse payment, and notify entities using state budget funds and send to the same-level financial agency for resolution in the following cases:

- Expenditure not in compliance with regulations, quotas, and state financial expenditures.

- Lack of conditions for expenditure as stipulated in this Circular.

5\. All state budget expenditures shall be recorded in Vietnamese Dong according to each fiscal year, each level of budget, and the state budget classification. State budget expenditures in foreign currency, goods, and labor days shall be converted and recorded in Vietnamese Dong according to exchange rates, prices of goods, and labor day rates prescribed by the competent authority.

5. All state budget expenditures shall be recorded in Vietnamese Dong according to each fiscal year, each level of budget, and the state budget classification. State budget expenditures in foreign currency, goods, and labor days shall be converted and recorded in Vietnamese Dong according to exchange rates, prices of goods, and labor day rates prescribed by competent authorities.

6. During the management, issuance, and settlement of state budget expenditures, incorrect expenditures must be recovered and reduced. Based on decisions of financial agencies or competent state agencies, State Treasuries shall implement the recovery and reduction of state budget expenditures.

7. Management, issuance, and payment of construction investment expenditures, special expenditures (defense, security), expenditures of Vietnamese representative offices abroad, and village budget expenditures shall be separately guided by the Ministry of Finance.

II. SPECIFIC PROVISIONS

1. Conditions for Issuance and Payment:

State Treasuries will only carry out issuance and payment of state budget expenditures when all of the following conditions are met:

1.1. Included in the approved annual state budget estimate.

- In cases of unexpected expenditures outside the approved estimate that cannot be delayed such as expenditures for disaster relief, fire fighting, etc., allocation and settlement will be based on decisions of the competent authority.

- In cases where there are urgent expenditures outside the approved estimate such as disaster relief, fire fighting, etc., issuance and payment can be based on decisions of competent authorities.

1.2. Comply with state budget expenditure regulations, standards, and quotas prescribed by the Government or competent state agencies.

1.3. Approved by financial agencies or the head of entities using state budget funds or authorized persons.

+ For expenditures issued directly by financial agencies, the approval order is the "Payment Order" of the financial agency. The financial agency is responsible for inspecting and supervising the content and nature of each expenditure to ensure compliance with state budget issuance regulations. State Treasuries are responsible for paying and disbursing to entities using state budget funds according to the content recorded in the "Payment Order" of the financial agency.

+ For expenditures that have been notified of funding limits by financial agencies, the approval order is the "Funding Limit Withdrawal Form" of the entity using state budget funds. The Funding Limit Withdrawal Form must clearly indicate:

+ The entity issuing the approval order (entity using state budget funds).

+ The expenditure content.

+ The amount in figures and words.

+ The state budget classification.

+ The signature of the head (or authorized person), chief accountant (or authorized person) of the entity issuing the approval order.

1.4. Have all relevant supporting documents.

a\. For salary and allowance expenditures:

+ Staff establishment and salary fund registration table approved by the competent authority.

+ List of individuals receiving salaries and allowances.

+ Increase and decrease staff establishment and salary fund table approved by the competent authority (if applicable).

+ Previous month's payroll sheet.

b\. For scholarships and living expenses of students:

+ Scholarship and living expense registration table for students approved by the competent authority.

+ Scholarship and living expense registration form for students approved by the competent authority.

+ Previous month's scholarship and living expense payment sheet.

+ Quarterly procurement, construction, and minor repair budget approved by the competent authority.

+ Decision approving tender results by the competent authority (for procurement of equipment, working tools, construction, and repairs requiring tendering as prescribed).

+ Tender documents for procurement of equipment, working tools, construction, and repair (for cases required to conduct tendering according to regulations).

Article on sale and purchase of goods, services.

+ Price quotation form from the supplier.

+ Sales invoice, materials, and equipment.

+ Construction and repair price notification from the competent authority.

+ Other relevant supporting documents such as checks, payment orders...

d. For other regular expenses:

+ Quarterly regular expense budget (divided by month).

+ A list of expenditure vouchers signed by the head, chief accountant (or authorized person) of the entity.

+ Monthly regular expense settlement report according to each category of expenditure.

2. Pre-issuance and pre-payment control:

2.1. When there is a need for expenditure, entities using state budget funds submit to the State Treasury where transactions are conducted the following related payment documents and materials:

- Authorization to spend.

- Checks, payment orders.

- Other documents depending on the nature of each expenditure as mentioned in point II.1.4 above.

2.2. State Treasuries check the expenditure documents of the entity, including:

- Checking and comparing expenditures with the budget to ensure that all expenditures must be included in the approved budget.

- Checking and comparing expenditures with funding limits notified by financial agencies or authorized superior management agencies to ensure that expenditures have funding limits allocated by competent authorities.

- Reviewing and controlling documents and vouchers according to regulations for each type of expenditure.

- To check and control expenditures to ensure compliance with financial expenditure standards and regulations.

For expenditures without established standards and regulations, the State Treasury shall inspect and oversee according to the approved budget of the entity by the competent authority.

- Reviewing and controlling accounting factors to ensure compliance with the National Budget Chart of Accounts.

- To verify the seals and signatures of the approver (or authorized person), the chief accountant (or authorized person), ensuring they match the registered samples at the State Treasury.

2.3. After reviewing and supervising the disbursement documents and vouchers of the entity, the State Treasury will process:

- If all conditions stipulated are met, the State Treasury will proceed with the advance payment or settlement procedures for the entity.

- If the conditions are not met, the State Treasury has the right to refuse issuance and payment, return the documents and vouchers to the entity, and notify the financial agency and higher-level State Treasury for coordinated handling. The head of the State Treasury is responsible for the issuance, payment, or refusal thereof.

3. Methods of issuance and payment:

Disbursement and payment are carried out in two forms: advance payment and direct payment.

3.1. Advance payments:

a. Recipients of advance payments:

- Salaries and allowances.

- Scholarships and living expenses.

- Administrative expenses.

- Advance payments for purchasing assets and minor repairs and construction that do not meet direct issuance and payment conditions or advance payments under contracts.

b. Amount of advance payments:

- The amount of advance payment depends on the nature of each expenditure item proposed by the entity using state budget funds; the maximum advance payment amount per quarter or month must not exceed the expenditure limit announced by the competent authority for each category.

c. Procedures for advance payments:

- The entity using state budget funds prepares an "Advance Payment Request" to send to the State Treasury along with relevant documents and materials, specifically:

+ For salaries and allowances, as specified in point II.1.4.a above.

+ For scholarships and living expenses, as specified in point II.1.4.b above.

+ For asset purchases, construction, and minor repairs:

* Quarterly procurement and minor repair budgets approved by the competent authority.

* Tender documents and minutes for equipment and work tool purchases, and minor repairs and constructions (for cases requiring tendering as prescribed).

* Purchase and service contracts.

+ For other regular expenses:

* Approved quarterly regular expenditure budget (divided by month).

* Reports on the settlement of regular monthly expenditures by category from the previous month.

+ Other related documents such as: budget limit withdrawal forms, payment authorization forms, checks...

- The State Treasury reviews and controls the contents of the documents and materials and processes the advance payment for the entity.

d. Settlement of advance payments:

- After making expenditures, the entity is responsible for submitting to the State Treasury the relevant expenditure documents and vouchers as specified in point II.1.4 above to settle the advance payment and convert it to direct issuance and payment.

- The State Treasury reviews and controls the actual expenditure report of the entity, if the conditions are met, it will proceed with direct payment and recover the advance payment.

+ If the issuance and payment amount exceeds the advance payment amount, the State Treasury will issue the difference.

+ If the issuance and payment amount is less than the advance payment amount, the State Treasury will reduce the advance payment or deduct from future issuance and payment amounts for that category.

- In cases where the advance payment has not been settled, entities may settle in the following month or quarter. All advance payments must be settled within the adjustment period for final settlement. Unsettled advance payments beyond the adjustment period for final settlement will be reported by the State Treasury to the same-level financial agency or reported to the higher-level State Treasury (for expenditures under the upper-level budget) to reduce the next year's issuance amount or recover reduced state budget expenditures according to the decision of the financial agency.

3.2. Issuance and payment:

a. Recipients of direct payment include:

- Expenditures meeting the conditions for direct payment.

- Advance payments meeting the conditions for conversion to direct payment.

b. Amount of direct payment:

The issuance and payment amount is based on the state budget expenditure documents proposed by the entity using state budget funds. The maximum issuance and payment amount per month or quarter must not exceed the limit announced by the competent authority; the maximum issuance and payment amount per year must not exceed the limit announced by the competent authority within the approved state budget for the year.

c. Procedures and formalities for payment disbursement:

- When there is a need for payment disbursement, budget expenditure units shall submit relevant financial documents and payment vouchers to the State Treasury.

- The State Treasury checks and controls the legality and validity of the documents and vouchers; compares them with the budget and funds provided by the competent authority; if the conditions are met as stated in point II.1 above, it will directly pay the suppliers or service providers through the entity.

4. Methods of issuance and payment for certain main expenditures:

4.1. Issuance and payment of regular expenditures for administrative and public service units.

a. Salary-related items, scholarships, and living expenses:

- Monthly, based on the roster of personnel and salaries, scholarships, and living expenses of the entity approved by the competent authority, together with the advance payment request form and the budget limit withdrawal form for salary payments requested by the entity using state budget funds, the State Treasury provides advance payments to the entity for salary payments. The maximum advance payment must not exceed the approved salary fund and the budget limit announced by the competent authority.

- At the end of the month, during the next month's salary payment period, the entity submits to the State Treasury the salary, scholarship, and living expense settlement report of the previous month to convert the advance payment to direct issuance and payment as specified in point 3.1.d above.

b. Purchases of office supplies, equipment, work tools, minor repairs, and small-scale construction:

- The State Treasury reviews and supervises the expenditure documents and vouchers (as specified in point II.1 above); if the conditions are met, it proceeds with the settlement procedures.

- Based on the settlement request form, the budget limit withdrawal form accompanied by the payment authorization form or bank transfer check of the entity using state budget funds, the State Treasury directly pays the suppliers or service providers through the bank account opened at the bank (or State Treasury).

- In cases where expenditures do not meet direct payment conditions, the State Treasury issues advance payments to the entity using state budget funds:

+ On the basis of the "Request for Advance Payment" of the unit and the attached withdrawal limit expense document along with the mandate payment, the unit using state budget funds issues a check, the State Treasury provides advance payment to transfer money to the goods and service provider unit through an account opened at the Bank (or State Treasury) or provides the state budget expense using unit to pay directly to the goods and service provider.

+ After making payments, the unit using state budget funds is responsible for settling the advance payment according to regulations: the unit sends invoices and documents to the State Treasury for settlement of the advance payment. Based on the unit's request for advance payment settlement accompanied by other related documents, the State Treasury checks and controls if the conditions for payment as stipulated in point II.1 above are met, then proceeds with the procedure to convert from advance payment issuance to payment issuance.

- For direct payments made by the State Treasury to the goods and service provider units, the State Treasury retains one set of file documents (a copy signed and stamped by the head of the unit using state budget funds).

c. Other regular expenses:

- For expenses that can be settled directly (such as communication fees, public services...), the State Treasury checks and controls the documents and conditions for payment according to regulations and makes direct payments to the goods and service provider units.

- For expenses that have not yet been able to make direct payments: based on the annual and quarterly budgets approved by the competent authority, the expense limit announced by the competent authority, and the unit's request for advance payment, the State Treasury implements monthly advance payments. Units using state budget funds must carry out expenditures and bear responsibility for their expenditure decisions, ensuring they are in accordance with current state financial expenditure standards and norms.

- At the beginning of the following month, no later than the 5th day of each month, units using state budget funds must report the actual expenditures of the previous month to the State Treasury along with a list of related documents; the State Treasury will check and control, if the conditions for payment are met, it will proceed with the procedure to convert from advance payment issuance to payment issuance and retain one copy of the expenditure document list.

The State Treasury will only provide advance payments for the next month if the unit has settled the advance payment of the previous month.

4.2. For economic public expenditure, program/project expenditure:

a. For economic public expenditure, program/target expenditure, and project expenditure tied to management tasks of Ministries, sectors, and localities approved by the supervising agency and the expense limit announced by the competent authority, the State Treasury will implement issuance and payment according to the provisions in point II.4.1 above.

b. For state budget expenditure on projects under programs 327, 773, settlement, relocation, people's forestry, agriculture, fisheries (excluding loans), geological public expenditure, infrastructure repair, railway, road bridges, maritime safety... currently managed by the State Treasury, direct issuance will be done through the State Treasury without issuing cash payment orders as before. The relevant agencies will coordinate with the State Treasury to distribute the expense limits to the users. Management, issuance, and payment will be carried out by the State Treasury according to the regulations for each type of public expenditure and the provisions in point II.4.1 above.

c. For special nature economic public expenditure funds, the Ministry of Finance will issue separate guidance.

4.3. For state budget loan disbursement expenditure:

- For state budget expenditure, the finance agency transfers the source of funds to the agency assigned the loan task or transfers money according to the contract to the organization being lent to in the case of direct lending.

- The agency tasked with lending or the financial authority in cases of direct lending is responsible for managing, lending, recovering principal and interest, and settling accounts in accordance with prescribed regulations.

- For recovered loans, the agency tasked with lending shall remit to the state budget or use for further lending as decided by the competent authority.

4.4. For state budget loan repayment expenditure:

a. Foreign debt repayment: (for the central budget)

- Based on the budget for foreign debt repayment and payment requests, the finance agency prepares a "Cash Payment Order" to transfer to the State Treasury for repayment; based on the "Cash Payment Order" of the finance agency, the State Treasury processes the treasury fund withdrawal to repay foreign debts.

- In cases where foreign debt repayment is made in foreign currency, the finance agency prepares a foreign currency payment request and a cash payment order in Vietnamese Dong (the amount in Vietnamese Dong recorded on the cash payment order is the amount of foreign currency to be repaid multiplied by the accounting exchange rate published by the Ministry of Finance) and sends it to the State Treasury. Based on the foreign currency payment request and the cash payment order, the State Treasury withdraws centralized foreign currency reserves to repay foreign debts while recording state budget expenditure in Vietnamese Dong.

b. Domestic debt repayment:

- Debts regarding government treasury bills and bonds issued by the State Treasury:

+ For government treasury bills and bonds auctioned through the State Bank: based on the State Treasury's request, the finance agency prepares a "Cash Payment Order" to transfer to the State Treasury for repayment of due debts.

+ For government treasury bills and bonds directly issued by State Treasury units (including early redemption): the State Treasury pays and settles directly to the bill and bond holders and reconciles with the state budget.

+ For local construction bonds (under the responsibility of local government budgets): when the repayment deadline arrives, the provincial Department of Finance and Prices establishes a "Cash Payment Order" to transfer funds to the State Treasury for repayment.

- Other domestic debt repayment expenses: the State Treasury will settle according to the finance agency's cash payment order.

4.5. For expenditure on activities of the Communist Party of Vietnam, political-social organizations, and social-professional organizations:

+ In cases where the finance agency issues quarterly expense limits, the State Treasury will issue and settle for the unit using state budget funds as stipulated in point II.4.1 above.

+ In cases where the financial authority allocates funding through a "Payment Order," the State Treasury pays the budget-funded entity according to the financial authority's "Payment Order."

4.6. Foreign Currency Expenditure:

a. Expenditure in foreign currency from the centralized foreign currency reserve managed by the Ministry of Finance (Central State Treasury):

The allocation and payment of expenditures in foreign currency shall be carried out as follows:

+ For expenditures in foreign currency directly allocated by the Ministry of Finance:

* The Ministry of Finance shall prepare a request for foreign currency expenditure accompanied by a domestic currency payment order (the amount on the "Payment Order" shall be the equivalent amount in foreign currency to be paid, multiplied by the accounting exchange rate prescribed by the Ministry of Finance).

* Based on the payment order and the request for foreign currency expenditure, the State Treasury Central Office shall disburse from the centralized foreign currency reserve to make payments and at the same time record domestic currency national budget expenditures.

+ For expenditures in foreign currency by units using state budget funds:

* Based on the approval of foreign currency expenditures by the Ministry of Finance (Department of Foreign Financial Affairs), units using state budget funds shall prepare a limit withdrawal form (the amount on the limit withdrawal form shall be the equivalent amount in foreign currency to be paid, multiplied by the accounting exchange rate prescribed by the Ministry of Finance) and send it to the State Treasury where the account is opened to process a temporary advance of state budget expenditures and purchase foreign currency from the centralized foreign currency reserve.

* Based on the approval of foreign currency expenditures by the Ministry of Finance and payment documents (checks, payment orders...), the State Treasury Central Office shall disburse from the centralized foreign currency reserve to make payments to the unit.

b. Purchase of foreign currency by banks:

In cases where the centralized foreign currency reserve is insufficient for direct expenditures and for local government budget expenditures: based on the approved state budget estimates, authorized expenditure limits, and expenditure requests from units, the State Treasury shall provide temporary advances or payments to units using state budget funds in domestic currency according to the bank's published selling exchange rate at the time of foreign currency expenditure so that the units can directly purchase foreign currency from the bank.

4.7. Expenditures in kind and labor days:

For expenditures in state budget funds in kind and labor days, based on the financial authority's revenue and expenditure order, the State Treasury shall record the state budget fund revenue and expenditure.

4.8. For entrusted funds:

- In cases where the financial authority allocates entrusted funds in the form of a spending limit, the State Treasury shall inspect, supervise, and allocate payments to units using state budget funds as stipulated in Section II.4.1 above.

- In cases where the financial authority allocates allocated funds through a "Payment Order," the State Treasury pays and disburses according to the financial authority's "Payment Order."

5. Accounting entries and reporting of state budget expenditures:

5.1. Accounting entries:

- Units using state budget funds shall organize accounting entries in accordance with the prescribed accounting system.

- The State Treasury records budget expenditures by fiscal year, budget level, and budget item.

For temporary advances, the State Treasury shall record temporary advances of state budget expenditures; when conditions for payment are met, the State Treasury shall convert the temporary advance to a payment allocation.

5.2. Reporting of state budget expenditures:

- Monthly, quarterly, and annually, units using state budget funds shall prepare reports on state budget expenditures and submit them to the competent authority for confirmation by the State Treasury where the allocation and payment were made. The competent authority shall compile the state budget expenditure report and submit it to the financial authority at the same level.

- Monthly, quarterly, and annually, the State Treasury shall prepare reports on state budget expenditures and submit them to the financial authority at the same level and to the higher-level State Treasury. The State Treasury Central Office shall compile the state budget expenditure report and submit it to the Ministry of Finance.

6. Recovery of reduced state budget expenditures:

6.1. During the management, allocation, and settlement of state budget expenditures, the financial authority has the right to decide on the recovery of reduced state budget expenditures for expenditures that violate regulations, are not in accordance with the purpose, or exceed the national standards. Units using state budget funds shall promptly pay according to the decision of the financial authority. The State Treasury shall base its procedures for recovering reduced state budget expenditures on the financial authority's decision and the payment receipt from the units using state budget funds.

6.2. Based on the decisions of authorized state agencies (Courts, Police, People's Procuratorates) regarding the recovery of expenditures that violate regulations, embezzlement causing loss of state assets, the State Treasury shall carry out procedures to recover reduced state budget expenditures according to the National Budget Item List of the expenditures already made.

7. Management of the state budget:

- Based on the assigned annual revenue and expenditure tasks of the state budget (divided by quarter), the financial authority shall establish quarterly state budget fund reserve levels to ensure payment of state budget expenditures during the period and notify the State Treasury for coordination in management.

- When the reserve fund falls below the established level, the State Treasury shall immediately notify the financial authority to report to the competent authority to take measures:

+ Urging timely collection of state budget revenues to ensure the concentration of revenues according to the plan.

+ Reviewing and adjusting the allocation limits for units using state budget funds for unnecessary expenditures.

+ Temporarily borrow from the financial reserve fund or other loans to ensure payments for expenditures. When sufficient revenue is collected, repayment must be made according to the prescribed regulations.

In special cases, if all measures above still fail to ensure payment, the financial authority must temporarily suspend state budget expenditures. The State Treasury has the right to refuse to execute payment orders and limit notifications from the financial authority if the state budget reserve does not guarantee payment.

III. IMPLEMENTATION

1. This Circular takes effect from January 1, 1997. Previous documents and systems issued contrary to this Circular are no longer effective.

2. For state budget expenditures that have been temporarily advanced from January 1, 1997, units using state budget funds shall report to the financial authority for review and settlement to serve as the basis for converting from temporary advances to final allocations of state budget expenditures.

3. Ministries, sectors, People's Committees at all levels, units using state budget funds, and units within the financial system are responsible for implementing this Circular.

Nguyen Sinh Hung (Signed)