Joint Circular No. 22/2003/TTLT-BTC-BKHCN-BNV guiding the financial management mechanism for public scientific and technological organizations operating with revenue.

CIRCULAR

JOINT CIRCULAR OF THE MINISTRY OF FINANCE - THE MINISTRY OF SCIENCE AND TECHNOLOGY - THE MINISTRY OF HOME AFFAIRS NO. 22/2003/TTLT/BTC-BKH&CN-BNV DATE MARCH 24, 2003 GUIDELINES ON THE FINANCIAL MANAGEMENT MECHANISM 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 units with income, the Ministry of Finance issued Circular No. 25/2002/TT-BTC dated March 21, 2002 for guidance.

To be consistent with the specific characteristics of science and technology, the Joint Ministries of Finance - Science and Technology - Home Affairs provide additional guidelines on financial management regulations for public organizations with income in the field of science and technology as follows:

I-OBJECTS:

The object of this Circular is public scientific and technological organizations with income that receive part of their operating expenses from the state budget or self-fund all operating expenses (collectively referred to as scientific and technological organizations with income - 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 units of public institutions are subject to Decree No. 10/2002/NĐ-CP when they meet the following conditions:

* Having a decision to establish the unit by competent authority in writing.

* Having legal personality, having its own 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.

Units under the budgetary planning directly subordinate to TCKH&CN CT such as training centers, magazines... are subjects implementing Decree No. 10/2002/NĐ-CP dated January 16, 2002 of the Government, are objects applying this Circular and other Circulars guiding activities in various fields (education and training, culture and information...).

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

For TCKH&CN without income from operations, not being the object of this Circular. Operating expenses of TCKH&CN without income from operations are funded by the state budget and managed according to the current mechanism.

II-SOURCES OF OPERATING INCOME IN SCIENTIFIC AND TECHNOLOGICAL ORGANIZATIONS:
TCKH&CN CT have the following sources of operating income:

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

1- Income from various fees and charges retained by the unit for use in accordance with the Law on Fees and Charges and guiding documents of the State.

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

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

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

- Training, consulting, providing information on science and technology, industrial property, standards and quality management.

- Other service activities.

The level of income from the above items is agreed upon by the head of the unit in the contract with the requesting party based on the principle that TCKH&CN CT ensure cost recovery and have some 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 operating income to support higher-level budget units in carrying out common activities, the allocation ratio 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 operating income, TCKH&CN CT are permitted to legally raise funds from organizations and individuals both domestically and internationally to serve production and service provision activities in accordance with current laws.

III- CONTENT OF REGULAR EXPENSES:

TCKH&CN CT can use state budget funding and their own operating income to cover regular expenses for the following purposes:

1- Expenses for cadres, civil servants, employees, and contractual workers: Wages, salaries, bonuses, allowances, collective welfare, contributions to social insurance, health insurance, trade union fees 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 scientific research and technological expenses according to the unit's functions.

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

6- Rental expenses: Rent for transportation equipment, rent for premises, land, various types of equipment, domestic and foreign experts, labor, other rentals.

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

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

9- Expenditure on regular procurement and maintenance: Procurement of replacement tools, 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); use of revenue from social welfare contributions, environmental sanitation expenses, security and public order expenses, etc.

12- Non-recurring expenditures shall be implemented in accordance with the provisions of Government Decree No. 10/2002/NĐ-CP dated February 16, 2002, and Circular No. 25/2002/TT-BTC dated March 21, 2002, issued by the Ministry of Finance. .

IV- PUBLIC SCIENTIFIC AND TECHNOLOGICAL ORGANIZATIONS

THAT ARE AUTONOMOUS IN FINANCIAL MANAGEMENT, SELF-DECISION MAKING
AND RESPONSIBLE AS FOLLOWS:
1- Regarding the use of funds from state budget allocation and revenue from public services:

1.1- For Public Scientific and Technological Organizations that fully self-fund their regular expenses:

They are authorized by competent authorities to have a stable budget for three years for subordinate units as follows:

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

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

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

For those types of fees and charges that are retained and remitted to the state budget at a certain percentage, the competent authority will adjust the annual budget allocation to suit the activities of the unit.

The supervising authority does not allocate production and service provision revenue to Public Scientific and Technological Organizations; the unit builds its own revenue plan to manage throughout the year. For units that only have production and service provision revenue without fee and charge revenue, the competent authority allocates the production and service provision revenue budget as the basis for managing revenue and expenditure.

b) Allocation of expenditure:

Allocate the total regular operational expenditure from retained fees and charges 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 scientific research projects, ministry-level and sector-level projects; target programs; procurement funding according to state regulations; funding for streamlining staffing; matching funds for foreign projects; investment capital for basic construction; procurement and major repair funding for fixed assets and other non-recurring expenditures... then the main department (for Public Scientific and Technological Organizations under central management), local supervising authority (for Public Scientific and Technological Organizations under local management) will allocate the budget for Public Scientific and Technological Organizations 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 projected fee and charge revenue (the retained portion), the unit

must reduce expenditure accordingly.

For Public Scientific and Technological Organizations that are authorized to collect production and service provision revenue, when there is excess revenue, the unit may use the entire excess revenue to increase income and strengthen material foundations, and when there is reduced revenue, the unit must reduce expenditure accordingly.

1.2- For Public Scientific and Technological Organizations that partially self-fund their regular operational expenses, the competent authority will allocate a stable budget for three years as follows: 1.2.1- Allocation of revenue from fees and charges under the state budget, including: - The amount of fees and charges retained by the unit for use according to the regulations of the competent authority.

For those types of fees and charges that are retained and remitted to the state budget at a certain percentage, the competent authority will adjust the annual revenue allocation to suit the activities of the unit.

The supervising authority does not allocate production and service provision revenue to Public Scientific and Technological Organizations; the unit builds its own revenue plan to manage throughout the year. For units that only have production and service provision revenue without fee and charge revenue, the competent authority allocates the production and service provision revenue budget as the basis for managing revenue and expenditure.

1.2.2- Allocation of expenditure:

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

a) Regular operational expenditure:

The supervising authority does not allocate production and service provision revenue to Public Scientific and Technological Organizations; the unit builds its own revenue plan to manage throughout the year. For units that only have production and service provision revenue without fee and charge revenue, the competent authority allocates the production and service provision revenue budget as the basis for managing revenue and expenditure.

- Allocate the total regular operational expenditure from retained fees and charges for the unit to use according to the regulations of the competent state authority.

- Regular operational 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 scientific research and technology projects, ministry-level and sector-level projects; target programs; procurement funding according to state regulations; funding for streamlining staffing; matching funds for foreign projects; investment capital for basic construction; procurement and major repair funding for fixed assets and other non-recurring expenditures... then the main department (for Public Scientific and Technological Organizations under central management), local supervising authority (for Public Scientific and Technological Organizations under local management) will allocate the budget for Public Scientific and Technological Organizations according to current regulations.

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

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

After the three-year stable funding period, Public Scientific and Technological Organizations with revenue must report a summary to the competent authorities for review and decision on stable funding for the next period.

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

During the operation period, the head of the Public Scientific and Technological Organization with revenue may decide on the labor utilization plan as follows:

1.2.3 - In cases where units save on regular expenditure or increase revenue from fees and charges compared to the allocated budget estimate, the unit may use the entire saved funds and additional revenue to supplement the salary fund and operating expenses of the unit.

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

For those types of fees and charges that are retained and remitted to the state budget at a certain percentage, the competent authority will adjust the annual revenue allocation to suit the activities of the unit.

After a three-year period of stable funding, units with income must report a summary for review and decision by competent authorities regarding the allocation of stable funding for the subsequent period.

2 - The staffing level serving as the basis for preparing the budget for the salary fund to be implemented stably over three years is the number of staff positions assigned by the competent authority up to December 31 of the immediately preceding year.

During the course of operations, the head of the income-generating public service unit may decide on plans for labor utilization as follows:

2.1- Reorganize cadres, civil servants, and public officials (including those who have signed labor contracts within the authorized quota) to enhance the efficiency and quality of operations of the unit. Those individuals subject to reduction in the authorized quota shall enjoy policies and benefits according to current regulations.

2.2- For self-financing public service units that fully cover their regular operational expenses, based on job requirements and financial capacity of the unit, the Head may sign indefinite-term labor contracts in accordance with the Labor Law; individuals signing indefinite-term labor contracts must meet the required standards, structure of job titles, and expertise as stipulated by the sectoral management agencies and be classified under the administrative public service salary scale prescribed in Decree No. 25/ND-CP dated May 23, 1993, and enjoy rights and obligations as provided by law.

2.3- For scientific and technological centers that partially cover their regular operational expenses, based on job requirements and financial capacity of the unit, the Head may sign labor contracts in accordance with the Labor Law, but must comply with the staffing norms issued by the competent authority. Individuals signing indefinite-term labor contracts must meet the required standards, structure of job titles, and expertise as stipulated by the sectoral management agencies and be classified under the administrative public service salary scale prescribed in Decree No. 25/ND-CP dated May 23, 1993, and enjoy rights and obligations as provided by law.

2.4- The Head of the scientific and technological center has the right to terminate labor contracts with individuals signed by the unit. The procedures for terminating labor contracts shall follow the provisions of the Labor Law.

2.5- Implement democratic and transparent practices as prescribed by law.

3- Salary Fund and Income:

The salary fund and income of the scientific and technological center are sourced from two origins:

3.1- State budget to pay salaries, wages, and allowances linked to salaries of cadres, civil servants, public officials within the authorized quota and labor contracts (for scientific and technological centers that partially cover their regular operational expenses) in accordance with the provisions of Decree No. 25/ND-CP dated May 23, 1993, and current guiding documents on salaries and allowances. 3.2- Based on the results of financial activities (revenue from public services and savings in regular expenses)

and the implementation of professional tasks, the salary fund and income of the scientific and technological center are determined according to Point 1, Section IV of Circular No. 25/2002/TT-BTC dated March 21, 2002, guiding the implementation of Decree No. 10/2002/NĐ-CP dated January 16, 2002, on financial systems applicable to self-financing public service units. The unit establishes rules for salary and wage payments and discusses them openly and unanimously at the staff meeting. Based on the unit's rules for salary and wage payments and the determined salary fund, the Head of the unit decides

the amount of salary and wage payments for cadres, civil servants, public officials, and labor contracts based on the monthly performance of each individual. At year-end, any unused salary funds are transferred to the income reserve fund and carried over to the next year for continued use.

3.3- 4- Establish internal expenditure regulations: - Within the scope of the unit's financial resources (including state budget allocations and revenue from public services), the Head of the scientific and technological center establishes higher or lower standards, norms, and internal expenditure regulations for management and professional activities than those prescribed by the State, suitable for the unit's specific operations.

- In the internal expenditure regulations, the scientific and technological center prioritizes expenditures on professional activities to ensure the quantity and quality of research and technology application activities.

- The above standards, regulations, and norms are discussed openly within the unit. 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 revenue from public services, providing a 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 allocates regular operating funds (for units that partially cover their costs) through the State Treasury under Item 134 "Other Expenditures" in the state budget classification according to corresponding types and items. If allocations have been made according to the state budget classification, the Head of the unit granted autonomy can adjust the expenditure items within the total allocated regular operating funds.

For non-regular funds, the finance agency implements allocations according to the current state budget classification. 6- Regarding depreciation of fixed assets: Scientific and technological centers engaged in production and services using fixed assets must implement depreciation of fixed assets in accordance with Decision No. 166/1999/QĐ-BTC dated December 30, 1999, on the management, use, 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 align with the asset's lifespan and technological updates, and the service recipient's payment capacity.

The entire amount of depreciation of fixed assets is recorded in the cost of products and services in contracts between the scientific and technological center and parties requesting production and services.

For non-recurring funds, the financial agency shall disburse according to the current state budget classification.

6 - Regarding the provision and use of depreciation of fixed assets: Research and Technology Institutions engaged in production and service activities using fixed assets must implement the 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, use, and provision of 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 than prescribed in order to recover capital promptly, but it must be consistent with the life span and technological renewal of the asset and the payment capacity of the service recipient. The full amount of depreciation of fixed assets is recorded in the cost of products and services in contracts between Research and Technology Institutions and parties requesting production and service provision.

The total amount of depreciation of fixed assets is accounted for in the cost of products and services in contracts between Research and Technology Institutions and parties requesting production and service provision.

7. State scientific and technological institutions (hereinafter referred to as "Institutions") that need to liquidate assets: Establish an asset liquidation committee pursuant to Decision No. 55/2000/QĐ-BTC dated April 19, 2000 of the Minister of Finance on the issuance of regulations on the management of the disposal of state assets at administrative agencies and public service units. The proceeds from the liquidation of assets formed from the state budget or derived from the state budget, after deducting liquidation costs (weighing, measuring, transporting, determining technical parameters, overtime pay if applicable), shall be transferred to the development fund for public service activities of the unit. In cases where assets are formed from borrowed funds, the unit may use the proceeds from the liquidation, after deducting liquidation costs, to repay the borrowed capital; after fully repaying the capital, the remaining amount shall be transferred to the development fund for public service activities of the unit.

8. At year-end, any regular operating expenses funded from the state budget and income from public service activities of the Institutions that have not been expended shall be carried over to the next year for continued expenditure and settlement in the accounting period of the following year. Based on reconciliation between the State Treasury and the unit by December 31, the State Treasury shall process the transfer of unspent funds to the next year for the Institutions according to Circular No. 81/2002/TT-BTC dated September 16, 2002 of the Ministry of Finance, and simultaneously notify the corresponding financial authority in writing for management purposes.

9. The Institutions shall conduct accounting in accordance with Circular No. 121/2002/TT-BTC dated December 31, 2002 of the Ministry of Finance guiding accounting for revenue-generating public service units.

V- IMPLEMENTATION PROVISIONS:

This Circular takes effect from January 1, 2003.

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

During implementation, if there are any difficulties, relevant ministries, ministerial-level agencies, government agencies, localities, and the Institutions shall report to the Joint Ministries for necessary amendments and supplements to ensure compliance.