Circular No. 217-TC/NSNN on guiding the closing of accounts and the preparation of the final settlement of the State Budget for 1996

CIRCULAR

Regarding the guidance on closing accounts and preparing the final settlement of the State Budget for 1996

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The annual end-of-year account closing work, which involves compiling the total settlement report on revenue and expenditure of the State Budget, is a regular and extremely important task; in 1995, many units and localities performed well in their end-of-year account closing and submitted their settlement reports to the Ministry of Finance on time and with quality; however, some units and localities still did not strictly comply with the regulations of the Ministry of Finance, causing difficulties for the analysis, presentation, and consolidation of the total settlement report on the State Budget to be presented to the National Assembly.

To implement the Law on the State Budget that was passed by the National Assembly on March 20, 1996, the end-of-year account closing and preparation of the total settlement of the State Budget for 1996 must quickly and efficiently handle revenues and expenditures according to the fiscal year, ensuring accuracy and timeliness.

In 1996, the end-of-year account closing and preparation of the total settlement of the State Budget will still be carried out in accordance with the provisions of Circular 57 TC/NSNN dated November 26, 1990, Directive 192 TC/NSNN dated November 18, 1995, and Circular 14 TC/HCVX dated February 28, 1994, issued by the Ministry of Finance. To effectively implement the provisions of these circulars and meet the requirements for consolidating and presenting the total settlement of the State Budget for 1996 to the National Assembly, the Ministry of Finance provides additional specific guidance on the following points:

I- END-OF-YEAR ACCOUNT CLOSING WORK FOR REVENUE AND EXPENDITURE OF THE STATE BUDGET IN 1996:
END OF FISCAL YEAR 1996:

The end-of-year accounting work for closing the State Budget revenue and expenditure is divided into two stages as follows:

- Preparation period before the end of the fiscal year: starting from the end of November to December 31, 1996, administrative and public service units, financial agencies, and State Treasury at all levels shall proceed to settle necessary tasks before closing the accounting books for revenue and expenditure on December 31, 1996.

- Adjustment period for settlement: starting from January 1, 1997 to March 31, 1997, financial agencies and State Treasury at all levels shall adjust revenues and expenditures that have been implemented but whose supporting documents are still in transit, rectify errors in the accounting process of revenue and expenditure, and account for expenditures of the previous fiscal year approved by the competent authority to continue spending. The adjustment period for settlement is defined for each level of budget as follows:

+ By the end of January 1997 for district, county, city, and town budgets directly under provinces.

+ By the end of February 1997 for provincial and centrally-administered city budgets.

+ By the end of March 1997 for the central budget.

TASKS TO BE RESOLVED DURING THE PREPARATION PERIOD BEFORE THE END OF THE FISCAL YEAR:
DURING THE PERIOD PREPARING FOR THE END OF THE FISCAL YEAR:

1. For Ministries, sectors, and budgetary units:

a) Ministries, sectors, economic organizations, and financial agencies at all levels shall take concrete measures to direct and urge subordinate units and enterprises under their jurisdiction to reconcile and review again, and complete procedures to pay all State Budget revenues into the State Treasury, resolutely preventing the misuse of State Budget funds.

b) Budgetary units: must continuously monitor and grasp the balance of the budgetary limit account and cash deposit account to proactively manage expenses, urge the final settlement of advance payments, loans, and pre-loans before December 31, and ensure that payment vouchers have sufficient time to return to the State Treasury where the account is held.

The remaining balance of the budgetary limit accounts of central and local budgetary units opened at the State Treasury until the end of December 31, 1996, must be canceled.

c) The following items of expenditure with balances remaining until December 31, 1996, may be transferred to 1997 for continued spending:

- Expenditures not sourced from the unit's own funds.

- Expenditures allocated in advance for 1997.

- Bonuses, salaries, and other allowances stipulated by regulations that should be paid in 1996 but were not yet disbursed.

d) The balance of the budgetary limit and cash deposit accounts of units under the Ministry of Defense and the Ministry of Public Security as of December 31, 1996, will automatically be transferred to a separate account (as specified by the Central State Treasury) and processed according to the directive of the Minister of Finance. The Financial Management Department of the Ministry of Defense and the Ministry of Public Security are responsible for guiding subordinate units to implement, consolidate the balance of the cash deposit accounts of subordinate units, obtain confirmation from the State Treasury, and continue to complete the required documentation as stipulated below to submit to the Ministry of Finance for consideration of transferring the balance to 1997 for the unit.

e) If it is necessary to continue spending the remaining balances of expenditures as specified in points c and d above in 1997, the unit must complete the procedure to request the transfer of the balance to the same-level financial agency for approval; the application for approval includes:

- A letter from the unit addressed to the financial agency and the State Treasury at the same level requesting the transfer of the balance of the cash deposit account at the time of the request before December 31, 1996.

- A detailed statement of the balance of the cash deposit account confirmed by the State Treasury where the unit has its account, accompanied by relevant vouchers or contracts for goods and services not yet completed related to the amount requested for transfer.

- The opinion of the department, office, or specialized Financial Management Division of the financial agency.

- The unit's budgetary unit under which level of management shall be approved by the corresponding financial agency. For central-level budgetary units managed, the Ministry of Finance specifies as follows:

The Ministry of Finance (Department of State Budget) shall approve the balance of the cash deposit accounts of central-level budgetary units located in Hanoi, the balance of the cash deposit accounts of units under the Ministry of Defense and the Ministry of Public Security; the Ministry of Finance delegates the Provincial Finance and Price Bureau to approve the balance of the cash deposit accounts of central-level budgetary units located in other provinces and cities (excluding units under the Ministry of Defense and the Ministry of Public Security).

Starting from 1996, the representative office of the Ministry of Finance in Ho Chi Minh City will no longer be responsible for approving the balance of the cash deposit accounts of central-level budgetary units located in Ho Chi Minh City.

g) The period for transferring surplus balances to budgetary units at all levels begins on December 25, 1996, and ends at the end of work hours on December 31, 1996; for units under the Ministry of Defense and the Ministry of Public Security, it starts from January 1, 1997, and ends at the end of work hours on January 31, 1997. If beyond these deadlines, any unit that does not process the transfer procedures for deposit account balances shall be requested by the State Treasury to remit to the state budget, with payment vouchers recorded under Chapter 99 (A, B, C) Type 14 Item 01 Subitem 47 (units belonging to which level budget shall remit to that level budget). Financial authorities will not consider refunding money already remitted to the state budget for units that fail to follow the prescribed procedures and deadlines set by the Ministry of Finance.

2. Responsibilities of financial authorities:

a) The deadline for transferring year-end funds is as follows:

- For the central budget:

+ Before the end of work hours on December 15, 1996, for central budgetary units and local budgets in the provinces of Cao Bang, Lang Son, Ha Giang, Tuyen Quang, Son La, Lai Chau, Yen Bai, Lao Cai, Bac Thai, Quang Ninh, and provinces southward from Thua Thien Hue.

+ Before the end of work hours on December 18, 1996, for central budgetary units and local budgets in other provinces (excluding Hanoi City).

+ Before the end of work hours on December 20, 1996, for units located in Hanoi.

- For local budgets:

Depending on the actual situation of each locality, the Department of Finance shall consult with the State Treasury of the province to determine the final deadline for distributing budget limits and issuing payment orders to units and districts in accordance with the general closing date specified by the Ministry of Finance.

b) Inspect and handle matters related to the state budget: the financial authority shall take the lead in coordinating with the State Treasury to perform the following tasks:

- Organize inspections and supervision of expenditures during the last days of the year to prevent the phenomenon of spending to exhaust funds, circular transfers without adequate oversight by higher-level management and financial authorities.

- Settle definitively all loans, advances, temporary receipts, and temporary deposits.

- Verify figures with relevant units to ensure that revenues and expenditures of the state budget occurring from January 1, 1996, to December 31, 1996, match the fiscal year and are correctly recorded under Chapters, Types, Items, Subitems, and Accounts of the state budget classification.

- Check the implementation of the proportionate distribution of state budget revenues generated within the territory according to the current system of budget decentralization and adjust any errors if necessary.

- Process the transfer of surplus deposit account balances for budgetary units under their management and central budgetary units located in their province or city.

3. Responsibilities of the State Treasury:

a) Strictly monitor expenditures of budgetary units during the last days of the year. Prohibit allowing units to withdraw funds from limit accounts to deposit accounts and prevent expenditure to exhaust funds in any form.

b) Confirm in detail the balance of deposit accounts as of December 31 for budgetary units holding deposit accounts at the State Treasury. The State Treasury shall not automatically transfer surplus deposit account balances to budgetary units without the approval of the corresponding financial authority.

c) On December 31, 1996, remit all surplus deposit account balances of budgetary units that have not processed the transfer of deposit account balances as stipulated in point e, section 1 above to the state budget; remit all surplus balances of the "Authorized Expenditure" deposit account to the central budget.

d) On January 31, 1997, remit all surplus deposit account balances of units under the Ministry of Defense and the Ministry of Public Security to the central budget as stipulated in point e, section 1 above.

e) Prepare detailed lists of all surplus deposit account balances of budgetary units, units under the Ministry of Defense, the Ministry of Public Security, and the "Authorized Expenditure" deposit account balances that have been remitted to the state budget and send them to the corresponding financial authority. For surplus balances of central budgetary units located in the area and the "Authorized Expenditure" deposit account balances, the provincial State Treasury is responsible for consolidating and sending to the Central State Treasury for further consolidation and submission to the Ministry of Finance (Department of State Budget) by no later than February 10, 1997.

II- SETTLEMENT OF STATE BUDGET INCOME AND EXPENSES FOR 1996

When preparing the settlement report of state budget income and expenses for 1996, ministries, localities, financial authorities, and State Treasuries at all levels shall be responsible for implementing and guiding subordinate units to perform the following tasks:

1. For budgetary units:

a) Prior to officially preparing the settlement report of state budget income and expenses for 1996, the unit must reconcile its revenue and expenditure figures with the financial authority and the State Treasury at the same level, ensuring that the actual received funds match the allocations made by the financial authority and the amounts withdrawn from the State Treasury, both in total and in detail, with confirmation from the State Treasury. It is strictly prohibited to use funds from one expenditure item to cover another without the approval of the competent authority.

b) Unsettled funds from 1995 carried over to 1996 must match the approved settlement figures for 1995 from the financial authority; any discrepancies must be explained specifically in the settlement report.

c) The settlement report shall still be prepared according to the regulations set forth in the accounting system for budgetary units issued by Decision No. 257 TC/CĐKT dated June 1, 1990, of the Ministry of Finance and Circular No. 14 TC/HCVX dated February 28, 1994, of the Ministry of Finance.

- Specifically, for Item 70: pensions and benefits for policy beneficiaries, which do not arise in administrative and service units, such units shall not record expenditures under Item 70 (except for the Vietnam Social Insurance Authority).

- Benefits under Decision No. 201/TTg dated June 9, 1996, of the Prime Minister shall be settled under L13.K02.H2.M76 and not under Item 75 or Item 97.

d) The settlement of basic construction investment capital for 1996 shall basically still be carried out according to the accounting system and settlement regulations for basic construction investment capital and current guiding documents on preparing settlement reports issued by the capital allocation agencies. In 1996, the Ministry of Finance requests the investors and capital allocation agencies to strictly comply with the following provisions:

- For construction projects completed in 1996, the investors must prepare a comprehensive settlement report on all sources of capital for the completed project, including the situation of capital usage according to the current regulations (separating the portion of capital allocated and requested for settlement within the 1996 budget year), to be submitted to the capital allocation agency for review and consolidation, and then forwarded to the finance authority for the overall settlement of basic construction investment capital for completed projects in 1996. Important construction projects must submit separate settlement reports to the Government for submission to the National Assembly.

- For construction projects not completed in 1996, at the end of the year, the investors must prepare a comprehensive report on all received and utilized capital up to the end of 1996 (separating the portion of basic construction capital allocated and requested for settlement within the 1996 budget year), to be submitted to the capital allocation agency for review and consolidation, and then forwarded to the finance authority for the overall capital of unfinished basic construction projects in 1996.

e) For Ministries assigned by the State to manage and allocate funds for target programs, primary budget units must be responsible for preparing settlement reports on the receipt, allocation, and utilization of state budget funds and the achieved effectiveness of these target programs in accordance with Circular No. 14 TC/HCVX dated February 28, 1994, and Guidance Document No. 80/TC/NSNN dated February 26, 1994, issued by the Ministry of Finance. Settlement reports for target programs must be prepared separately without being consolidated with administrative-subsidized expenses of the unit and submitted to the Ministry of Finance no later than March 31, 1997, for the Ministry of Finance to review and consolidate the report for submission to the Government, which will then submit it to the National Assembly.

g) The annual settlement reports of the Ministry of Defense and the Ministry of Interior sent to the Ministry of Finance must be detailed according to the budget indices allocated at the beginning of the year for each expenditure task: administrative management expenses, training expenses, scientific research expenses, economic service expenses, and other special expenses.

2. Tasks of financial authorities at all levels:

a) Must ensure that the revenue and expenditure figures in the state budget and extrabudgetary revenues and expenditures match accurately; timely measures should be taken to address discrepancies before preparing the final settlement of state budget revenues and expenditures. The settlement report on state budget revenues and expenditures submitted to higher-level financial authorities must be confirmed by the Treasury at the same level.

b) Attention should be paid to accounting and settling the following items of state budget revenues and expenditures:

- Revenue and expenditure of goods from aid require distinguishing between the following two cases:

+ Goods from aid for which the Ministry of Finance has processed the recording of central government revenue and allocation to local government budgets, when the local government receives them, they should record and settle the subsidy income under Chapter 99B Class 14 Item 01 Subitem 2 Section 48; record and settle expenditures for the users according to the corresponding C.L.K.H.M of the current state budget classification.

- Goods from aid directly received by the local government without processing through the central government budget should be recorded and settled as local government revenue under Chapter 99 Class 14 Item 01 Subitem 5 Section 42; record and settle expenditures for the users according to the corresponding C.L.K.H.M of the current state budget classification.

- The 1996 electricity subsidy for flood prevention transferred from the central government budget to the local government budget should be recorded and settled as local government subsidy income under Chapter 99B Class 14 Item 01 Subitem 2 Section 48 like other subsidies; record and settle expenditures for the users according to the corresponding C.L.K.H.M of the state budget classification.

- Subsidies to village budgets should be recorded and settled under Chapter 99 Class 14 Item 01 Subitem 2 Section 96, not under Sections 97 or 99.

3. Regarding forms and time of submission of reports:

a) For budget units:

In addition to the forms prescribed in the administrative-subsidized expense system and Circular No. 14 TC/HCVX dated February 28, 1994, issued by the Ministry of Finance, the unit must also submit the following documents:

- A statement explaining the undetermined 1996 budget funds carried over to 1997 (attached to this letter) and the suggestions of the supervising agency to the same-level financial authority for consideration and resolution before issuing the approval for settlement to the unit. Based on the statement and the suggestions of the primary budget unit, the financial authority will consider and handle according to the following principles:

- Advance payments for basic construction projects and major repairs included in the initial plan and having complete procedures for capital allocation according to the current regulations may be carried over to 1997 to complete payment procedures and be reviewed for settlement in 1997.

- Inventory materials and goods no longer needed must be liquidated by a committee established according to regulations and sold to the state budget.

- Inventory materials and goods not usable in 1997 should use the 1997 budget funds to reduce the allocation of the 1996 budget.

- Advance payments for basic construction projects and major repairs not included in the approved plan and advance payments to individuals and units, cash reserves at the unit, and bank deposits of the unit at the Treasury and Bank (excluding the funds specified in point c, item 1, part I already approved by the financial authority to be carried over to 1997 for continued use) must be repaid to the state budget using 1997 budget funds to reduce the 1996 budget allocation.

b) For financial authorities at all levels:

In addition to the report forms for the final settlement of state budget revenue and expenditure in 1996 which continue to be implemented according to the model specified in Circular No. 116 TC/NSNN dated December 16, 1989 of the Ministry of Finance, it is requested that localities also submit the following annex tables:

- Summary table of state budget revenue and local budget expenditure (according to the attached model).

- Detailed analysis table of other revenues (Item 47) and other expenditures of the local budget (Type 14 Item 97).

For provinces that have used computers to prepare and compile the final settlement reports, they must additionally send floppy disks containing the final settlement figures to the Ministry of Finance. The data in the report sent to the Ministry of Finance must match the data on the disk. In cases where discrepancies need adjustment, such adjustments must be processed and reported to the Ministry of Finance to ensure the accuracy and timeliness of the data.

When preparing and compiling the final settlement, provinces must comply with the following regulations:

+ The final settlement report on revenue and expenditure by economic sector must ensure the principle that:

* The total of all items in a Clause must equal the total of the Clause.

* The total of all Clauses in a Type must equal the total of the Type.

* The total of all Types must equal the Total amount.

The Item code is defined as a single digit, starting from code number 1, without code 0; the Clause code is defined as two digits, starting from code 01, without code 00.

* The final settlement report on state budget revenue by economic sector under the total state budget revenue on provincial territory, state budget revenue of central units managed, state budget revenue of provincial units managed, state budget revenue of district units managed, and state budget revenue in the collective and individual economic sectors (divided into revenue categories) consists of two final settlement lines for state budget revenue and local budget revenue.

c) Time for submitting the final settlement report:

- The final settlement report of 1996 of primary budgetary units under the province, city, and the final settlement report on revenue and expenditure of districts, counties, and towns directly under the province must be submitted to the Provincial Department of Finance and Price Control no later than February 28, 1997.

- The final settlement report of 1996 of primary budgetary units under central management and the final settlement reports of target programs managed by ministries must be submitted to the Ministry of Finance no later than March 31, 1997.

- The final settlement report on state budget revenue and local budget expenditure in 1996 of provincial Departments of Finance under the direct jurisdiction of the Central Government must be submitted to the Ministry of Finance no later than April 30, 1997.

If the deadlines mentioned above are exceeded, financial authorities will temporarily suspend disbursements to any unit or locality that has not submitted the final settlement report until such time as the report is received. This includes investment capital for construction projects, national target programs, supplementary balancing funds for lower-level budgets, and authorized funds from the central budget. Financial authorities will not be responsible for any difficulties encountered by units due to insufficient funding or delayed spending at the end of the year caused by non-compliance with the prescribed models and deadlines set by the Ministry of Finance.

The above are some guidelines regarding the closing of accounts and preparation of the final settlement of state budget revenue and expenditure in 1996. Primary budgetary units directly under the Central Government and localities, financial authorities, and treasury offices at all levels should make thorough preparations and promptly organize and guide subordinate units to implement these regulations effectively. Any issues encountered during implementation that are unclear or problematic should be reported to the Ministry of Finance for study and resolution.