Circular No. 223-TC/CĐKT Supplementing and guiding some points on the accounting regime for material warehouses and goods

CIRCULAR

Supplementing and guiding certain points regarding the accounting system for material warehouses and goods

________________________

 THE MINISTER OF FINANCE

Implementing Resolution No. 59-CP dated May 10, 1967 of the Council of Ministers on strengthening the protection of assets and practicing thrift;

Based on newly issued state documents and experiences summarized from asset inspections, especially the inspection on January 1, 1968;

After consulting with relevant sectors, the Ministry of Finance supplements and guides the following points regarding the accounting system for material warehouses and goods to contribute to enhancing management and protection of materials and goods at units, sectors, and levels.

I. ACCOUNTING FOR MATERIALS AND GOODS IN SCATTERED WAREHOUSES

1. For materials and goods stored in scattered warehouses within villages, neighborhoods, or entrusted to households or placed in public locations, the owning unit must organize well the protection and preservation according to point a, Section 3, Part I of Decision No. 127-CP dated August 5, 1968 of the Council of Ministers. The warehouse manager must comply fully with the accounting principles and procedures as stipulated in the accounting system for goods warehouses and the accounting system for materials.

The accounting department must open detailed ledgers for materials and goods to monitor and reflect the situation of receipt, dispatch, and remaining of each type and item of materials and goods in each warehouse, strictly defining the types of receipts and dispatch documents to be applied as well as the sequence and time for circulation and transfer of documents to ensure accurate and timely accounting records.

The heads of owning units must arrange sufficient warehouses based on specific conditions, the importance level of each warehouse, and the distance between warehouses. Each warehouse may be managed by one warehouse manager or one manager overseeing several nearby warehouses (warehouse cluster). The warehouse manager must be a person with good political qualities and appropriate cultural and preservation skills.

2. Generally, it should be strictly limited to entrusting consumable goods to households to reduce difficulties for the owning unit and the household in protecting the goods, preventing damage and loss.

For materials and goods entrusted to households, attention should be paid to:

a) For materials and goods stored in households where direct warehouse managers cannot be stationed to oversee and preserve, the owning unit should only store long-term reserve materials and goods carefully packed intact. Before entrusting, the owning unit must discuss thoroughly with the People's Committee of the village or neighborhood to select suitable storage locations. When entrusting materials and goods to a household, responsibility for oversight and preservation must be clearly assigned to the household owner through education and motivation. A list detailing the number of boxes, packages, bags, etc., entrusted to each household must be established, with three copies: one given to the household owner, one kept by the business operations department (transportation or supply) for ledger recording of receipt, dispatch, and remaining; and one given to the accounting department for detailed ledger recording of materials and goods.

b) In cases where materials and goods entrusted to households are considered part of a warehouse cluster with a warehouse manager responsible for oversight and preservation, in addition to the tasks mentioned in point a, the warehouse manager must also establish inventory cards for each location storing materials and goods.

3. Receipts and dispatches of materials and goods in any type of warehouse must follow the procedures stipulated in the accounting system for goods warehouses and the accounting system for materials.

For scattered warehouses far from the managing unit's administrative machinery where the business operations department cannot issue warehouse receipt or dispatch forms as for nearby warehouses, the business operations department should prepare monthly plans for receipt or dispatch of materials and goods for each transferring and receiving unit. These plans, signed and approved by the unit head, should be sent to the warehouse manager as orders for receipt or dispatch limits. The warehouse manager must not exceed the quantity (or volume) of materials and goods specified in these plans (except for some special cases to be discussed later). Upon each receipt or dispatch, the warehouse manager must jointly with the sender or receiver establish a receipt or dispatch form with signatures from both parties, serving as the basis for recording in the inventory card and the plan for receipt or dispatch of materials and goods. Periodically every five or ten days (as prescribed by the unit head), the warehouse manager must send all delivery and receipt documents to the unit's accounting department for record-keeping and settlement procedures. At the end of the month, the warehouse manager must submit the receipt and dispatch plans to the business operations department (or supply department) for checking the implementation of the monthly plans.

II. ACCOUNTING FOR SURPLUS, SHORTAGE, AND LOSS OF MATERIALS AND GOODS

To facilitate accounting work and help determine the material responsibility of those directly involved in the preservation, transportation, and use of materials and goods, thereby continuously improving preservation work, reducing natural losses gradually, and limiting other losses, supervisory agencies must organize monitoring to have a basis for researching and proposing to the competent authority of the State to set standards for surplus and natural losses for each type of material and goods in each stage: transportation, preservation, drying, processing...

The accounting heads of units are responsible for applying officially established standards for surplus and natural losses in situations involving handover, inspection, and inventory of materials and goods in stock to distinguish reasonable surplus and natural losses from other losses, helping to determine material responsibility and resolve issues promptly, decisively, and strictly in accordance with Point 5, Part III of Decision No. 127-CP dated August 5, 1968 of the Council of Ministers.

The accounting department must base on confirmation documents for surplus and shortage of materials and goods to proceed with the following accounting bookkeeping:

- For surplus or shortage of materials and goods due to errors in ledger entries (for example: goods received or dispatched to Warehouse A but recorded incorrectly for Warehouse B; goods received or dispatched of one type recorded as another type; incorrect quantities recorded, etc...), the accountant must correct the ledger entries.

In cases where materials and goods of the same specifications, quality, and under the same person's custody, if during inventory there are excesses and shortages, they may offset each other to calculate the actual surplus and loss.

In cases where materials and goods of the same type but different specifications and quality, under the same person's custody, if during inventory there are items with excesses and shortages of equal quantity and it is determined that this is due to mistaken delivery or receipt, the quantities may be offset and adjusted in the accounting records. The accounting department must calculate the price difference of the materials and goods that have been offset. If there is a shortage in price, it must be recovered from the recipient of the materials and goods; if recovery is not possible, it will be handled according to specific circumstances, either included in circulation losses, cost prices, or the person at fault must compensate. If there is an excess in price, it must be returned to the recipient of the materials and goods; if the recipient cannot be identified, the accounting department shall record the excess in miscellaneous income and remit it to the budget.

- For materials and goods actually exceeding the quota or above the quota, the business department (or supply department) must issue a warehouse entry form, and the accounting department will record it in the books according to specific circumstances:

a) For materials and goods exceeding the quota, the business department must issue a warehouse entry form and record the value of the excess materials and goods in the debit side of the "profit and loss" account (detailing surplus assets) and remit it to the budget.

b) For materials and goods exceeding the quota, the business department must also issue a warehouse entry form as mentioned above, and the accounting department must record the value of the excess materials and goods in the "surplus and shortage accounts awaiting resolution" account. After being processed by a superior authority, the accounting department will record it according to the decision made:

- If approved for recording as profit, the accounting department will transfer the value of the excess materials and goods to the credit side of the "profit and loss" account as stated above.

- If approved for remittance to the budget, the accounting department must transfer the value of the excess materials and goods to the credit side of the "budget settlement account" and proceed with immediate settlement.

c) For materials and goods below the quota, the business department or supply department must issue a warehouse exit form, and the accounting department must record the value of the deficient materials and goods on the debit side of the "circulation expenses" account or the "workshop management expenses" account (if the deficiency falls within the scope of material storage), or the "production costs" account (if the deficiency falls within the production scope).

d) For materials and goods exceeding the quota and for deficiencies of materials and goods without quotas, the head of the unit and the chief accountant, along with relevant departments, must investigate the specific causes and report to the higher supervisory authority for handling according to current state regulations. While waiting for resolution, the accounting department must transfer the value of the deficient materials and goods to the debit side of the "surplus and shortage accounts awaiting resolution" account.

After being processed by a superior authority, the accounting department will record it according to the decision made:

- If approved for recording as "circulation expenses" or "production costs," the accounting department must record the value of the deficient materials and goods on the debit side of the "production costs" account, similar to the case of deficiencies below the quota, as mentioned above.

- If the decision is to make the person responsible for storage and use compensate, the value of the deficient materials and goods must be transferred to the debit side of the "accounts receivable" account.

III. REGARDING SOME SPECIAL CASES OF MATERIALS AND GOODS INVENTORY AND ISSUE.

In all cases of material and goods delivery and receipt, units delivering and receiving must apply one of the appropriate methods based on specific conditions: weighing, measuring, gauging, counting, to ensure strict management of materials and goods. If the delivery and receipt location is frequently bombarded by the enemy and full procedures for inspection, weighing, measuring, gauging, and counting cannot be completed, after temporary delivery and transfer to the nearest safe location, the correct inspection procedures must be carried out. During inspection, both the delivering and receiving parties must be present. In exceptional cases where the delivering unit cannot be present during inspection, the receiving unit must establish an inspection team to inspect the materials and goods. After inspection, a report must be established; if discrepancies, excesses, shortages, or damage occur, the business department (or supply department) of the receiving unit is responsible for verifying, contacting the delivering unit to resolve.

While waiting for resolution, the accounting department of the receiving unit must record the excesses, shortages, and damages in the "surplus and shortage accounts awaiting resolution" account.

1. In urgent delivery and receipt cases, if the business department (or supply department) cannot promptly issue a warehouse entry form or does not have the conditions to establish an inspection team, the warehouse keeper is permitted to conduct the inspection and issue a report or list detailing the quantity, quality, and specifications of each item received, then transfer it to the business department (or supply department) of the unit. At the latest, the next day, the business department (or supply department) must issue a formal warehouse entry form.

2. If receiving materials and goods that are not intended for oneself, the receiving unit must handle it as follows:

a) Establish a report clearly stating the transport number, transporter, name, specifications, code, quantity (or volume), quality of the received materials and goods, then inform the sending unit. The business department (or supply department) must issue a separate warehouse entry form, the warehouse keeper must inspect, store separately, record in a separate warehouse book, and manage carefully as with the unit's own materials and goods. Accounting must open separate books, follow up at the "materials and goods held in trust" account (outside the asset summary).

The receiving unit absolutely has no right to use or sell the held materials and goods without the consent of the owner of the materials and goods.

N ||| The entity in charge of materials and goods, upon receiving the aforementioned notice, must immediately send someone to the location or use the most reliable and fastest means to inform the entity that received the materials and goods about who the entity responsible for receiving them is and take all necessary actions to continue transferring those materials and goods to the entity responsible for receiving them. In the case where the entity in charge of materials and goods agrees to sell all of these materials and goods to the current holding entity, the accounting department of the entity must adjust the accounting records and complete all payment procedures to be sent to the entity that received them to pay the purchase price promptly.

b) For materials and goods whose ownership is unclear, the receiving entity must carry out inspection and acceptance procedures, warehouse entry procedures, and record keeping (as mentioned above), while simultaneously reporting to the superior management authority and the same-level financial authority to identify the owner according to the provisions of Directive No. 103-TTg/TN dated June 15, 1967 of the Prime Minister and Circular No. 07-TC/CĐKT dated July 29, 1967 of the Ministry of Finance.N ||| For materials and goods that are damaged or have decreased quality and may be completely destroyed if left for too long (such as wet rice, melted sugar...), the entity receiving the materials and goods must immediately report to the entity in charge of the materials and goods (if known), and at the same time report immediately to the superior management authority (or the provincial or city administrative committee) and the same-level financial authority to develop plans to resolve the situation promptly. After selling the materials and goods, the proceeds must be deposited entirely with the bank to settle accounts with the entity owning the assets. If the owner is unknown, the entire amount received must be deposited into the central government budget.

N ||| In the case of issuing materials and goods held on behalf of others as mentioned above, the following procedures must be carried out:

N ||| - The person collecting the materials and goods must present their identification card, power of attorney, and two copies of the material and goods dispatch note from the entity in charge of the materials and goods.

N ||| - The business unit of the entity holding the materials and goods, after verifying the valid documents, must report to the head of the unit to issue an order to the warehouse keeper to dispatch the materials and goods.

N ||| - Upon completion of delivery and receipt, both the deliverer and the recipient must sign on both types of dispatch notes. The entity holding the goods retains one copy for accounting purposes to reduce the quantity of held materials and goods in the ledger, and gives one copy to the recipient of the materials and goods.

N ||| The entity in charge of the materials and goods must pay the entity holding the goods all costs incurred for preserving the entrusted materials and goods, and record this cost under circulation expenses or production costs.

N ||| In cases of emergency where some materials and goods need to be dispatched to serve combat requirements at locations where conflicts occur without the dispatch order from the unit head or authorized person, the warehouse keeper can only be allowed to dispatch with the condition that there is an order from

N ||| 5. In cases where materials and goods temporarily considered ownerless are issued, the issuing entity and the receiving entity must comply strictly with the regulations stipulated in Circular No. 07-TC/CĐKT dated July 29, 1967 of the Ministry of Finance.

N ||| IV. ACCOUNTING FOR MATERIALS AND GOODS IN TRANSIT

N ||| To strengthen asset protection and facilitate accounting work for materials and goods, entities in charge of goods, before shipping goods, must enter into transportation contracts with transport agencies. The contract must specify the name, quantity, volume, and quality of the materials and goods being transported, the delivery and receipt locations, the addresses of the sender and receiver, the freight charges to be paid, the responsibilities for loading and unloading, preservation, and compensation for losses caused by the subjective fault of the transport agency. When shipping goods, they must package them according to the technical standards prescribed by the management authority. For important goods, personnel must be assigned to accompany them.

N ||| 1. In cases where shipments must be transported by multiple vehicles, ships, train cars, etc., in addition to the general dispatch note and invoice accompanying the shipment, separate dispatch notes must also be prepared for each vehicle, ship, train car, etc., so that in any unforeseen circumstances requiring scattered deliveries, the carrier still has sufficient documentation to make deliveries.

N ||| Entities in charge of materials and goods must maintain detailed ledgers tracking each consignment and shipment of materials and goods handed over to transport agencies. For temporarily stored goods at ports, warehouses, railway stations, etc., they must keep separate ledgers for materials and goods that have been settled with the seller but not yet received physically.

N ||| 2. For materials and goods transferred between warehouses within the same entity, separate accounting ledgers must be maintained to track the status of materials and goods received and dispatched, as well as those still in transit.

N ||| 3. For materials and goods of foreign trade entities not yet delivered to domestic customers or shipped abroad, temporarily stored at docks, port areas, railway stations, etc., foreign trade entities must record these materials and goods in the "incoming inventory" or "outgoing inventory" account. At the same time, detailed accounting ledgers must be opened to track each consignment and shipment at each location, ensuring clear control over their own materials and goods and distinguishing them from consignments still in transit by sea or international rail.

N ||| 4. Protecting assets during the transportation of materials and goods is the responsibility of the transport agency. To fulfill this duty and ensure strict management of materials and goods during transportation, transport entities (including entities managing railway stations, port areas, etc.) must strictly implement the provisions outlined in Section 2 of Part I of Decision No. 127-CP dated August 5, 1968 of the Council of Ministers. Additionally, they must promptly organize and manage accounting for materials and goods received for transportation at transport entities, docks, and railway stations in accordance with warehouse accounting systems and material accounting systems to accurately track each consignment by waybill, clearly understand the number of consignments received, dispatched, and remaining at railway stations, docks, and port areas, including expanded, dispersed, evacuated, and underground areas, as well as on transportation means.

4. Protecting property during the transportation of materials and goods is the responsibility of the transport agency. To fulfill this duty and ensure strict management of materials and goods during transportation, transport units (including station and port management units...) must strictly implement the points stated in Section 2, Part I of Decision No. 127-CP dated August 5, 1968 of the Council of Ministers. Additionally, they must promptly organize and manage accounting for received transportation materials and goods at transport units, stations, ports... in accordance with warehouse goods accounting regulations and material accounting systems to accurately track each consignment, according to each waybill, clearly grasp the quantity of received transportation goods, the quantity already delivered, and the remaining quantity at stations, docks, ports..., including expanded, dispersed, evacuated areas, storage zones, as well as on transportation means.

During transportation, if there is a road blockage and materials and goods must be left along the road, the transportation unit must immediately report to the owner unit of the materials and goods via the most reliable and fastest means (point 1, section 2, part I of Decision No. 127-CP dated August 5, 1968 of the Council of Ministers).

If materials and goods need to be unloaded along the road or dispersed outside the station, dock, or yard area, the transportation unit must properly organize the preservation of assets according to point a, section 3, part I of the aforementioned Decision No. 127-CP.

When organizing the transfer, transportation units must ensure the principle of continuous transfer in the original lot and original trip. If during the transfer, the means of transport must be changed, thereby dividing the original lot of materials and goods into several smaller lots and loading them onto multiple means of transport, the transportation unit must issue new waybills for each lot separately, attaching them with the original waybill and if it needs to be sent in multiple batches, the portion of materials and goods sent first must be accompanied by the original waybill, noting that the remaining quantity will be sent subsequently. Each time additional materials and goods are sent, the new waybill must clearly state that these items are part of the subsequent shipment of which original lot of materials and goods and under which original waybill number and date, to facilitate the tracking and accounting by the receiving unit.

In cases where further transfer is not possible, the transportation unit must report this situation to the owner unit of the materials and goods so they can find a solution. If due to difficulties it is impossible to report, the transportation unit should hand over the materials and goods to the nearest unit in the same industry as the owner unit of the materials and goods. At the time of delivery, the carrier must jointly prepare a record with the recipient and send it to the owner unit of the materials and goods. If no similar unit can be found, the carrier must contact the People's Committee of the commune to find a place to store the materials and goods, discuss with the People's Committee on protection measures, and prepare a detailed record specifying the location of storage, name of the owner unit of the materials and goods, name of the unit and transporter… with confirmation from the People's Committee. This record must be made in three copies: one copy given to the People's Committee, one copy retained by the transportation unit, and one copy sent back to the owner unit of the materials and goods.

For all freight charges on the remaining route, the transportation unit must refund them to the owner unit of the materials and goods.

V. ACCOUNTING FOR MATERIALS AND GOODS DAMAGED DUE TO WAR

Units and enterprises whose assets have been damaged due to war must strictly implement the war damage statistics system issued pursuant to Decree No. 115-CP dated June 29, 1966 of the Council of Ministers and Circular No. 150-TC/TDT dated September 5, 1968 of the Ministry of Finance regarding the handling of capital for state-owned enterprises with assets damaged due to war.

While awaiting instructions from the Ministry of Finance or the Provincial or Municipal People's Committee (if it is a local enterprise), the accounting department must record the value of the damaged materials and goods in the account "damaged assets awaiting resolution" (for trading enterprises) or the account "excess/shortage assets awaiting resolution".

Once the Ministry of Finance or the Provincial or Municipal People's Committee has reviewed and resolved the capital issue, the accounting department will record the accounts based on specific circumstances:

- If approved to reduce working capital provided by the state budget, the value of the damaged materials and goods will be transferred to the debit side of the "state capital" account or the "special reserve capital" account (if the damaged materials and goods belong to the special reserve capital source).

- If approved to reduce borrowing within the limit provided by the state budget to the State Bank (or Construction Bank), the enterprise must refer to the bank's notice of debt cancellation and transfer the value of the damaged materials and goods to the debit side of the "bank loan within the limit" account.

- In cases where additional compensation is provided for the damaged materials and goods not sourced from state budget capital (such as short-term credit funds from banks, debts for goods payments...), the accounting department will debit the "bank deposit" account and credit the "compensation from the state budget" account while transferring the value of the damaged materials and goods from the "damaged assets awaiting resolution" (or "excess/shortage assets awaiting resolution") account to the debit side of the "compensation from the state budget" account.

- After suffering war damage, if the enterprise receives additional or reduced working capital from the state, the accounting department will record the increase or decrease in the "state capital" account as usual.

In cases where materials and goods being transported are damaged due to war, the escort personnel must work together with the transportation unit (if present) to follow the procedures stipulated in the war damage statistics system issued pursuant to Decree No. 115-CP of the Council of Ministers and Circular No. 150-TC/TDT of the Ministry of Finance.

If there are no escort personnel, the transportation unit must immediately inform the owner unit of the materials and goods through the most reliable and fastest means.

While waiting for the owner unit of the materials and goods to arrive and handle the situation, the transportation unit must take every effort to salvage, preserve, and protect the materials and goods as would be done in cases of road blockages mentioned above.

For materials and goods that require immediate consumption, the transportation unit should promptly deliver them to a unit in the same industry as the owner unit of the materials and goods, following the procedures outlined in the previous section (section III). If such a delivery cannot be made, the carrier must report to the Provincial People's Committee to seek solutions.

The owner unit of the materials and goods, upon receiving the damage report or record, must immediately dispatch personnel to the accident site to verify the extent of the damage and handle necessary matters and procedures according to the regulations and guidelines set by the state.

The accounting department of the owner unit of the materials and goods must base their records on the war damage documentation as previously stated.

VI. INSPECTION REGIME FOR WAREHOUSES AND REPORTING OF MATERIALS AND GOODS

In order to bring the management of materials and goods into a strict regimen, enhance the protection of state property as stipulated in Resolution No. 59-CP of the Government Council, the heads of units and enterprises must directly oversee periodic inspections of warehouses, ensuring that all warehouses are inspected at least once every quarter under any circumstances, with the aim of identifying any deficiencies in the storage of materials and goods and promptly formulating measures to address them to minimize losses and damage to state property.

The contents of warehouse inspections shall focus on the following main aspects:

- Checking whether the warehouses ensure adequate protection for the materials and goods stored therein.

- Verifying compliance with regulations on the preservation of each type and item of materials and goods, as well as principles and procedures for receiving, importing, and exporting materials and goods.

- Reviewing the recording of warehouse cards and the circulation and transfer of documents between the warehouse and the accounting department.

- Comparing the figures on the warehouse cards with the actual items, comparing reserve quotas with the quantity of materials and goods in stock, and identifying types of materials and goods that are stagnant or insufficiently stocked.

- Inspecting the quality of materials and goods and identifying types of materials and goods of poor quality that need to be addressed.

Alongside strengthening the inspection work of warehouse managers, in addition to strictly implementing the quarterly and annual reporting system for materials and goods as prescribed in the accounting and statistical reporting systems of the state, grassroots units, and supervising agencies (Ministries, General Departments, Bureaus) need to organize regular inventory reporting systems (every five days or ten days and monthly) for key types of materials and goods (as attached)(1).

Ministries, General Departments responsible for supervision, and local administrative committees shall base their regulations on the material and goods reporting system issued by the Ministry of Finance and according to the management requirements of their respective sectors and regions, specifying the deadlines and key items that must be reported during each period. To ensure the confidentiality of the reporting data, Ministries, General Departments responsible for supervision should establish "codes" for each item for remote units to report via telegraph.

Reports on materials and goods must include all materials and goods in warehouses, sales counters, materials and goods awaiting inspection, materials and goods entrusted to cooperatives, households, or external units, materials and goods in transit or scattered along roads, stations, ports, wharfs, etc.

The above are some supplementary points and guidelines for implementing the accounting system for material and goods warehouses in the current situation. It is requested that Ministries, General Departments, and local administrative committees, based on the accounting system for goods warehouses, the accounting system for materials, and this circular, promptly disseminate and urge, guide, and inspect units within their sectors and regions to implement these provisions. During the implementation process, if there are any difficulties or issues, they are requested to immediately report to the Ministry of Finance for timely research and resolution.