Joint Circular No. 22/2003/TTLT/BTC-BKH&CN-BNV guiding the financial management mechanism for public science and technology organizations operating with revenue

JOINT CIRCULAR

GUIDELINES FOR THE MANAGEMENT MECHANISM OF FINANCIAL RESOURCES FOR PUBLIC SCIENTIFIC AND TECHNOLOGICAL ORGANIZATIONS WITH INCOME

Implementing Decree No. 10/2002/NĐ-CP dated January 16, 2002 of the Government on financial regulations applicable to income-generating public service units, the Ministry of Finance issued Circular No. 25/2002/TT-BTC dated March 21, 2002.

To align with the specific characteristics of scientific and technological fields, the Joint Ministries of Finance - Science and Technology - Home Affairs provide additional guidelines on financial management regulations for public scientific and technological organizations with income as follows:

I-OBJECTS:

The subject of this Circular is public scientific and technological organizations with income that receive part of their operational funding from the State budget or fully self-fund their operational expenses (collectively referred to as income-generating scientific and technological organizations - abbreviated as TCKH&CN CT), including:

- Research and development institutes.

- Research and development centers.

- Laboratories.

- Research and testing stations.

- Scientific and technological service organizations (inspection, testing, certification, accreditation; application and transfer of scientific and technological progress; consulting, information, training on science and technology...).

The above public service units fall under the scope of implementing Decree No. 10/2002/NĐ-CP when they meet the following conditions:

* Having a decision on establishment by a competent authority in writing.

* Possessing legal personality, having a separate seal.

* Having an account at the Treasury or Bank.

* Having a financial and accounting organizational structure.

* Having legitimate sources of income.

Competent authorities have the responsibility to create favorable conditions for public scientific and technological organizations to implement Decree No. 10/2002/NĐ-CP dated January 16, 2002 of the Government.

Directly subordinate budget units of TCKH&CN CT such as training centers, journals... are subjects of implementing Decree No. 10/2002/NĐ-CP dated January 16, 2002 of the Government, and are also subjects of this Circular and other Circulars guiding activities in various fields (education and training, culture and information...).

For TCKH&CN CT with many directly subordinate independent accounting units, the competent authority assigns a stable budget to the first or second level budget unit to grant autonomy to directly subordinate budget units.

Public scientific and technological organizations without income do not fall under the scope of this Circular. The operational funding of public scientific and technological organizations without income is provided by the state budget and managed according to the current mechanism.

II-SOURCES OF OPERATIONAL INCOME IN PUBLIC SCIENTIFIC AND TECHNOLOGICAL ORGANIZATIONS:

TCKH&CN CT have the following sources of operational income:

1- Fees and charges retained by the unit for use in accordance with the Law on Fees and Charges and related guidance documents of the State.

2- Income from contracts for scientific research and technological development, and technology transfer contracts with organizations and individuals both domestically and internationally.

3- Income from scientific and technological services, standards, measurement, and quality control activities, including:

- Technical consultation, guidance, and technical review, technology transfer, calibration of measuring instruments, product and goods sample testing, construction system standard management guidance.

- Training, consulting, and provision of information on science and technology, industrial property, standards, measurement, and quality management.

- Other service activities.

The amount of income from the above items shall be agreed upon by the head of the unit in the contract with the service requester based on the principle that TCKH&CN CT ensure cost recovery and accumulation.

4- Income from production activities or joint production with economic entities.

5- Income from subordinate units to support common activities: Subordinate budget units may allocate a portion of their operational income to support higher-level budget units in carrying out common activities, the allocation ratio to be decided by the head of the lower-level unit.

6- Other income as prescribed by law: Such as interest from bank deposits from production and service provision revenues...

In addition to the aforementioned operational income, TCKH&CN CT are permitted to raise lawful capital from organizations and individuals both domestically and internationally to serve production and service provision activities in accordance with current laws.

III- CONTENTS OF REGULAR EXPENSES:

TCKH&CN CT may use state budget funds and their own operational income to cover regular expenses for the following purposes:

1- Salaries, wages, bonuses, allowances, welfare benefits, social insurance contributions, health insurance contributions, trade union fees for staff, civil servants, and contractual employees according to current regulations.

2- Administrative management expenses: electricity, water, fuel, environmental sanitation, office supplies, public services, telecommunications, propaganda, travel expenses, conference fees, telephone and fax charges, etc.

3- Direct professional expenses for the unit's activities according to assigned functions and tasks.

4- Regular expenses for scientific research and technological development according to the unit's functions.

5- Regular training and upgrading expenses for staff, civil servants, and contractual employees within the unit (excluding state-funded retraining expenses).

6- Rental expenses: rental of transportation means, premises, equipment, domestic and foreign experts, labor, and other rentals.

7- Expenses for implementing scientific research and technology transfer contracts; production and service activity contracts of the unit, including: salaries, wages, raw materials, depreciation of fixed assets, commissions, taxes (if applicable) as prescribed by law.

8- Regular expenses related to fee and charge collection activities as currently regulated.

9- Expenditure for regular procurement and maintenance: Procurement of replacement tools and regular maintenance of fixed assets serving professional work and maintenance of infrastructure projects.

10- International cooperation expenditure: outgoing and incoming delegations.

11- Other expenditures: repayment of principal and interest on loans from domestic and foreign credit institutions (if any); implementation of non-recurring expenditures as prescribed in Decree No. 10/2002/NĐ-CP dated February 16, 2002, of the Government and Circular No. 25/2002/TT-BTC dated March 21, 2002, of the Ministry of Finance.

IV- STATE SCIENTIFIC AND TECHNOLOGICAL ORGANIZATIONS WITH AUTONOMOUS FINANCIAL MANAGEMENT RIGHTS SHALL BE RESPONSIBLE FOR THE FOLLOWING:

1- Regarding the use of funds from state budget allocation and institutional revenue:

1.1- For scientific and technological organizations that self-fund all regular expenses:

The competent authority shall allocate a stable budget for three years to subordinate units as follows:

a)- Allocation of revenue from fees and charges under the state budget, including:

- Total revenue from fees and charges.

- Amount of fees and charges retained by the unit for use according to the regulations of the competent state agency for each type of fee and charge.

- Amount of fees and charges to be remitted to the state budget.

For fees and charges that are retained and remitted to the state budget at a percentage rate, the competent authority shall adjust the annual budget allocation to align with the unit's activities.

The supervising authority does not allocate production and service provision revenue to scientific and technological organizations. Units develop plans for revenue collection to manage throughout the year. For units with only production and service provision revenue and no fee and charge revenue, the competent authority allocates a budget for production and service provision revenue as the basis for managing revenue and expenditure.

b)- Allocation of expenditure:

Allocate the total regular expenditure from retained fee and charge revenue for the unit to use according to the regulations of the competent authority.

For non-recurring expenditures from the state budget: funding for national-level research projects, ministry-level and sector-level research projects; national target programs; commissioned projects under state regulations; personnel reduction funding; matching funds for foreign projects; aid capital, loan capital, basic construction investment; expenditure for major asset procurement and repair and other non-recurring expenditures... then the main department (for income-generating public institutions managed centrally), local supervising authority (for income-generating public institutions managed locally) shall allocate the budget to the public institution according to current regulations.

c- In cases where the unit exceeds the allocated stable fee and charge revenue, the unit may use the entire excess revenue to supplement the salary fund and operating expenses of the unit according to regulations;

In cases where the unit falls short of the allocated fee and charge revenue (retained portion), the unit must reduce expenditure accordingly.

For public institutions that have been allocated production and service provision revenue by the competent authority, when there is excess revenue, the unit may use the entire excess revenue to increase income and strengthen material resources, and when revenue decreases, the unit must reduce expenditure accordingly.

1.2- For scientific and technological organizations that partially self-fund regular operational costs, the competent authority shall allocate a stable budget for three years as follows:

1.2.1- Allocation of revenue from fees and charges under the state budget, including:

- Total revenue from fees and charges.

- Amount of fees and charges retained by the unit for use according to the regulations of the competent authority.

- Amount of fees and charges to be remitted to the state budget.

For fees and charges that are retained and remitted to the state budget at a percentage rate, the competent authority shall adjust the annual revenue allocation to align with the unit's activities.

The supervising authority does not allocate production and service provision revenue to scientific and technological organizations; units develop plans for revenue collection to manage throughout the year. For public institutions with only production and service provision revenue and no fee and charge revenue, the competent authority allocates a budget for production and service provision revenue as the basis for managing revenue and expenditure.

1.2.2- Allocation of expenditure:

a)- Regular expenditure:

- Allocate the total regular expenditure from retained fee and charge revenue for the unit to use according to the regulations of the competent state authority.

- Regular expenditure from the state budget for the first year of the stable period, annually increased according to the rate determined by the competent authority.

b)- Non-recurring expenditure from the state budget: funding for national-level research projects and technology projects, ministry-level and sector-level research projects; national target programs; commissioned projects under state regulations; personnel reduction funding; matching funds for foreign projects; basic construction investment; expenditure for major asset procurement and repair and other non-recurring expenditures... then the main department (for income-generating public institutions managed centrally), local supervising authority (for income-generating public institutions managed locally) shall allocate the budget to the public institution according to current regulations.

1.2.3 - In cases where the unit saves on regular expenditure or increases retained fee and charge revenue compared to the allocated budget, the unit may use the entire saved funds and increased revenue to supplement the salary fund and operating expenses of the unit.

In cases where revenue falls short of the allocated budget, the unit must reduce expenditure accordingly.

For public institutions that have been allocated production and service provision revenue by the competent authority, when there is excess revenue, the unit may use the entire excess revenue to increase income and strengthen material resources, and when revenue decreases, the unit must reduce expenditure accordingly.

After the three-year stable budget period, income-generating public institutions shall report their summary to the competent authorities for review and decision on allocating a stable budget for the next period.

2- The staffing level used as the basis for establishing a stable three-year budget for salary funds is the number of staff positions allocated by the competent authority as of December 31 of the previous year.

During operation, the head of the income-generating public institution may decide on the labor utilization plan as follows:

2.1- Reorganize cadres, civil servants, and employees (including those who have signed labor contracts within the staffing quota) to improve the efficiency and quality of the unit's operations. Those reduced from the staffing quota will enjoy policies and benefits according to current regulations;

2.2- For units with self-financed income that fully cover their regular operating expenses, based on work needs and financial capacity of the unit, the Head may enter into labor contracts in accordance with the laws on labor; those persons who are entered into indefinite-term labor contracts must meet the required standards, job title structure, and professional qualifications as prescribed by the sectoral management agencies, and shall be paid according to the civil service salary scale stipulated in Decree No. 25/ND-CP dated May 23, 1993 of the Government, and enjoy rights and obligations as prescribed by law.

2.3- For units with self-financed income that partially cover their regular operating expenses, based on work needs and financial capacity of the unit, the Head may enter into labor contracts in accordance with the laws on labor, but such contracts must comply with the staffing norms issued by competent authorities. Those persons who are entered into indefinite-term labor contracts must meet the required standards, job title structure, and professional qualifications as prescribed by the sectoral management agencies, and shall be paid according to the civil service salary scale stipulated in Decree No. 25/ND-CP dated May 23, 1993 of the Government, and enjoy rights and obligations as prescribed by law.

2.4- The Head of the unit may terminate labor contracts with those persons whom the unit has entered into labor contracts. The procedures for terminating labor contracts shall be carried out in accordance with the laws on labor.

2.5- Implement democratic and transparent practices in accordance with the provisions of the law.

3- Salary Fund and Income:

The salary fund and income of the unit are sourced from two origins:

3.1- The state budget to pay salaries, wages, and allowances linked to salaries for officials, civil servants, employees within the establishment and contractual workers (for units that partially cover their regular operating expenses) shall be implemented in accordance with Decree No. 25/ND-CP dated May 23, 1993 of the Government and current guiding documents on salaries and allowances.

3.2- Based on the results of financial activities (institutional revenue and savings on regular expenses) and the implementation of specialized tasks, the salary fund and income of the unit shall be determined in accordance with Point 1, Section IV of Circular No. 25/2002/TT-BTC dated March 21, 2002 of the Ministry of Finance guiding the implementation of Decree No. 10/2002/NĐ-CP dated January 16, 2002 of the Government on financial regulations applicable to institutions with self-financing. The unit shall establish internal rules for paying salaries and wages, and discuss them openly and reach consensus at the staff meeting of the unit.

Based on the internal rules for paying salaries and wages of the unit and the determined salary fund, the Head of the unit shall decide the amount of salary and wage payments for officials, civil servants, employees, and contractual workers according to the monthly performance of each individual.

3.3- At the end of the year, any remaining salary funds not spent shall be transferred to the income reserve fund and carried over to the next year for continued use.

4- Establishing Internal Expenditure Regulations:

- Within the scope of the unit's financial resources (including state budget allocations and institutional revenue), the Head of the unit shall establish higher or lower expenditure standards, norms, and regulations for management and professional activities compared to the national regulations, suitable for the specific operations of the unit.

- In the internal expenditure regulations, the unit shall prioritize expenditures on professional activities to ensure the quantity and quality of scientific research and technology application activities.

- The above standards, regulations, and norms shall be discussed openly within the unit. The internal expenditure regulations serve as the basis for the Head of the unit to manage and settle accounts for funds from the state budget and institutional revenue, and form the legal foundation for the State Treasury to control expenditures.

5- Allocation of Funds from the State Budget:

Based on the state budget allocation plan, the finance agency shall allocate regular operating funds (for units that partially cover their expenses) through the State Treasury under Item 134 "Other Expenses" according to the corresponding categories and subcategories of the state budget classification.

In cases where allocations have been made according to the items of the state budget classification, the Head of the unit granted autonomy may adjust the expense items within the total allocated regular operating funds.

For non-recurring funds, the finance agency shall make allocations according to the current state budget classification.

6- Regarding Depreciation and Utilization of Fixed Assets: Units with production and service activities using fixed assets must implement depreciation of fixed assets in accordance with Decision No. 166/1999/QĐ-BTC dated December 30, 1999 of the Minister of Finance on the management, utilization, and depreciation of fixed assets and current guiding documents of the State.

In special cases, the Head of the unit may decide to apply a higher depreciation rate to recover capital promptly, but it must be consistent with the asset's lifespan and technological renewal, and the payer's ability to pay.

The entire amount of depreciation of fixed assets shall be recorded in the cost of products and services in contracts between the unit and parties requesting production and services.

For units requiring asset liquidation: A liquidation committee shall be established in accordance with Decision No. 55/2000/QĐ-BTC dated April 19, 2000 of the Minister of Finance on the regulation for managing the disposal of state assets in administrative and institutional organizations. The proceeds from the sale of assets formed from the state budget or with a state budget origin, after deducting liquidation costs (weighing, measuring, transporting, technical parameters determination, overtime pay if any...), shall be transferred to the development fund of the unit's institutional activities. In cases of liquidating assets formed from borrowed funds, the unit may use the proceeds from the sale, after deducting liquidation costs, to repay the loan; once the loan is fully repaid, the remaining proceeds shall be transferred to the development fund of the unit's institutional activities.

8. At the end of the year, any remaining regular operating funds allocated from the state budget and income from the scientific and technological activities and science and technology organizations (TCKH&CN CT) that have not been spent may be carried over to the next year for continued expenditure and settlement within the accounting period of the following year. Based on the reconciliation between the State Treasury and the unit by the end of December 31, the State Treasury will process the transfer of the unspent funds to the next year for TCKH&CN CT according to Circular No. 81/2002/TT-BTC dated September 16, 2002, issued by the Ministry of Finance, and simultaneously notify the corresponding financial authority in writing for management purposes.

9. The TCKH&CN CT shall conduct accounting in accordance with Circular No. 121/2002/TT-BTC dated December 31, 2002, issued by the Ministry of Finance, which provides guidance on accounting for revenue-generating public institutions.

V- IMPLEMENTATION PROVISIONS:

This Circular takes effect from January 1, 2003.

Other aspects of financial management shall be implemented in accordance with the provisions of Circular No. 25/2002/TT-BTC dated March 21, 2002, issued by the Ministry of Finance.

In the course of implementation, if there are any difficulties, the relevant ministries, ministerial-level agencies, government-affiliated agencies, localities, and TCKH&CN CT shall report to the Joint Office for necessary amendments and supplements to ensure compliance.

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