Circular No. 27/2001/TT-BTC guides the implementation of financial regulations for the Deposit Insurance of Vietnam.

CIRCULAR

OF THE MINISTRY OF FINANCE NUMBER 27/2001/TT-BTC DATE APRIL 27, 2001 GUIDING THE IMPLEMENTATION OF THE FINANCIAL REGIME FOR
VIETNAM DEPOSIT INSURANCE

Implementing Decision No. 145/2000/QĐ-TTg dated December 19, 2000 of the Prime Minister on the issuance of the Financial Management Regulation for Vietnam Deposit Insurance, the Ministry of Finance guides certain contents regarding the financial management regime for Vietnam Deposit Insurance as follows:

This technical regulation sets out technical requirements, testing methods, sampling procedures; management requirements; responsibilities of organizations and individuals producing, trading, and importing cigarettes.

1. Vietnam Deposit Insurance is a state financial organization with charter capital, operating without profit objectives, ensuring capital safety and self-covering costs, exempt from value-added tax on deposit insurance activities, exempt from corporate income tax and capital usage fees.

2. Vietnam Deposit Insurance is a centralized accounting unit within the entire system, implementing revenue and expenditure and finalizing revenue and expenditure financial accounts according to the provisions of the Financial Management Regulation issued together with Decision No. 145/2000/QĐ-TTg dated December 19, 2000 of the Prime Minister, the guidance provided in this Circular, and other relevant financial management regulatory documents.

3. The Chairman of the Board of Directors and General Director of Vietnam Deposit Insurance are responsible under the law for the management of capital and assets, the use of capital, compliance with financial, accounting, and auditing regimes as prescribed by law.

4. The Ministry of Finance performs the function of state management over finance, guiding implementation and inspecting the revenue and expenditure financial activities of Vietnam Deposit Insurance.

II. MANAGEMENT OF CAPITAL AND ASSETS

1. Vietnam Deposit Insurance implements capital and asset management according to the provisions of Chapter II of the Financial Management Regulation for Vietnam Deposit Insurance issued together with Decision No. 145/2000/QĐ-TTg dated December 19, 2000 of the Prime Minister.

2. Vietnam Deposit Insurance has the responsibility to monitor all existing capital and assets, implement accounting in accordance with current accounting and statistical regulations; fully, accurately, and promptly reflect the changes in capital and assets during the operation process, clearly defining the responsibilities of each department and individual for cases of damage or loss of assets.

3. The operational reserve fund formed from the premium income from deposit insurance is used to pay insurance money to depositors according to the provisions of the law.

Of the premiums collected from participating organizations in the first three years, from 2001 to 2003, 88% of the collected premiums are accounted for in the operational reserve fund, and 12% of the remaining premiums are accounted for in the income of Vietnam Deposit Insurance.

When a participating organization in deposit insurance loses its ability to pay and there is a decision to terminate operations by the competent state authority, Vietnam Deposit Insurance may use the operational reserve fund to pay insurance money to depositors according to the provisions.

In case the operational reserve fund is insufficient to pay insurance money to depositors, Vietnam Deposit Insurance reports the situation and proposes a resolution plan to the Ministry of Finance and the State Bank. Based on the proposals and recommendations of Vietnam Deposit Insurance, the Ministry of Finance and the State Bank will unify and submit to the Prime Minister for a decision on the resolution plan.

4. Vietnam Deposit Insurance may use capital for activities in accordance with the law, must ensure the principles of capital safety and development. Vietnam Deposit Insurance may purchase and invest in fixed assets according to the principle that the residual value of fixed assets does not exceed 15% of the charter capital.

Annual investment and procurement of fixed assets must comply with state regulations and within the approved annual plan.

Vietnam Deposit Insurance is responsible under the law for the use of capital for procurement and investment in fixed assets.

5. Vietnam Deposit Insurance may temporarily use idle capital for investment:

- Deposited at the National Treasury, State Bank, or state credit institutions.

- Purchasing government bonds, bills issued by the State Bank or state credit institutions.

The form and level of investment in idle capital according to the approved plan by the Board of Directors.

6. Vietnam Deposit Insurance carries out inventory, revaluation of assets, depreciation of fixed assets, loss handling, and disposal of assets according to the provisions of Article 7, Article 8, Article 9, and Article 10 of the Financial Management Regulation for Vietnam Deposit Insurance issued together with Decision No. 145/2000/QĐ-TTg dated December 19, 2000 of the Prime Minister.

III. INCOME AND EXPENSES

1. The income items of Vietnam Deposit Insurance include actual receipts in the year, including:

1.1. Income from deposit insurance business activities

- For the first three years from 2001 to 2003, Vietnam Deposit Insurance accounts for 12% of the total annual premiums collected from participating deposit insurance organizations as income.

- Interest income from loans made to support payment of insured deposits.

- Fees for guaranteeing special loans to provide funds for payment of insured deposits.

- Interest income from purchasing debts.

- Penalties for late payment of premiums as stipulated.

1.2. Income from financial activities

- Interest income from investments in securities.

- Interest income from deposits.

1.3. Other income

- Proceeds from liquidation and sale of assets: the total amount received from liquidation and sale of assets (excluding proceeds from liquidation of assets of participating deposit insurance organizations).

- Service fees for consulting and training staff for participating deposit insurance organizations.

1.4. Other income

All income generated by Vietnam Deposit Insurance during the period must be supported by valid invoices or documents and must be fully recorded as income.

2. Expenses of Vietnam Deposit Insurance are necessary expenditures for the operation of Vietnam Deposit Insurance, supported by valid invoices or documents. The level of expenditure and the objects of expenditure are implemented according to the provisions of the law. In cases where the law has not yet provided for such provisions, Vietnam Deposit Insurance establishes standards, decides on expenditures, and bears responsibility under the law. All expenses must be included in the annual financial plan of Vietnam Deposit Insurance, including:

2.1. Expenses for deposit insurance activities

- Interest payments on borrowed funds.

- Payment service fees, agency fees.

- Other expenses for business activities: expenses for buying and selling debts, investment activities, expenses for recovering difficult-to-collect debts, and other expenses for business activities.

2.2. Expenses for employees, including the following items:

- Wages, salaries, and other payments of a wage nature to be paid to employees.

- Allowances for members of the Board of Directors and Supervisory Board working on a part-time basis.

- Meal allowances as prescribed by the Vietnam Deposit Insurance Corporation but the monthly allowance for each officer or staff member shall not exceed the minimum wage stipulated by the State for civil servants.

- Expenses for female workers.

- Safety equipment expenses for those who need such equipment while working.

- Uniform expenses for officers and staff working at the Vietnam Deposit Insurance Corporation.

- Severance pay for employees.

- Hardship allowances.

2.3. Social insurance premiums, health insurance premiums, and union dues.

2.4. Expenses for the activities of the Party organization and mass organizations at the Vietnam Deposit Insurance Corporation, which are taken from the budget of these organizations; if the budget of these organizations is insufficient, the shortfall will be recorded as expenses of the Vietnam Deposit Insurance Corporation.

2.5. Management and administrative activity expenses

The expenses for management and administrative activities include:

a- Office supplies expenses: materials, printed papers, office supplies, fire prevention and firefighting equipment.

b- Postal and telecommunication expenses: expenses for postal fees, telecommunications, telephone, telegraph, leased communication channel fees, telex, fax charges based on invoices from postal authorities.

The provision of telephones at home is implemented according to the current regulations of the State as applicable to administrative and public service units.

c- Electricity, water, health, sanitation, and environmental protection expenses.

d- Fuel expenses: fuel expenses for transportation serving officials on business trips and leaders performing their duties.

e- Travel expenses for officials traveling domestically and internationally: implemented according to the regulations for state-owned enterprise officials and employees traveling domestically and internationally.

f- Reception, external affairs, ceremonial, conference, publicity, and advertising expenses in accordance with the current laws and must be related to the activities of the Vietnam Deposit Insurance Corporation. These expenses shall not exceed 7% of total expenses in the first two years of establishment and not more than 5% in subsequent years.

g- Training and research expenses for officials, including:

- Expenses for organizing short-term training, enhancement, and vocational training classes in computing, foreign languages for officials and staff of the Vietnam Deposit Insurance Corporation.

- Expenses for purchasing training materials, books, printing, and translating documents for training, enhancement, and vocational research.

- Expenses for organizing scientific conferences.

- Research project expenses.

- Expenses for applying science and technology.

- Other expenses as prescribed by the State.

The training, vocational training, and scientific conference plans are decided and approved by the Vietnam Deposit Insurance Corporation.

h- Expenses for hiring domestic and foreign experts based on actual needs and the total expense level in the annual financial plan.

i- Audit and inspection expenses.

j- Penalties for economic contract violations due to force majeure.

k- Other management expenses.

2.6. Asset expenses:

- Depreciation expenses for fixed assets in accordance with the management and usage regulations and depreciation rules for fixed assets prescribed for state-owned enterprises.

- Expenses for insuring assets.

- Expenses for purchasing labor tools.

- Maintenance and repair expenses for assets: the maximum annual expense shall not exceed 5% of the average value of fixed assets in the year.

- Rental expenses: the rental amount based on the lease agreement between the lessor and the Vietnam Deposit Insurance Corporation.

- Expenses for liquidation and sale of assets (including the remaining value of the asset and liquidation and sale expenses).

- Expenses for asset losses remaining after compensation from specified sources.

2.7. Tax, fee, and stamp duty expenses.

2.8. Reward expenses for individuals and units outside the industry contributing to the activities of the Vietnam Deposit Insurance Corporation: the recipients and forms of rewards are determined by the Vietnam Deposit Insurance Corporation. The maximum expense shall not exceed half a month's salary implemented in the year.

2.9. Other expenses include necessary expenses for the activities of the Vietnam Deposit Insurance Corporation arising during operations that are not covered by the above provisions.

3. The Vietnam Deposit Insurance Corporation shall accurately record income and expenses in accordance with the prescribed system, bear legal responsibility for the accuracy of income and expense items, and comply with regulations on invoice and accounting voucher systems.

4. The Vietnam Deposit Insurance Corporation shall not record the following items as operating expenses:

- Losses that have been supported by the Government or compensated by insurance agencies or the party causing the loss;

- Penalties for administrative violations, environmental violations, overdue loans, and financial system violations due to subjective reasons;

- Fines that groups or individuals must pay due to legal violations while performing their duties;

- Expenses unrelated to the activities of the Vietnam Deposit Insurance Corporation, such as basic construction investment expenses; support expenses for other organizations and individuals;

- Expenses from other funding sources: expenses for public welfare, reward and welfare expenses, and other expenses funded by other sources.

- Other invalid expenses.

IV. INCOME EXPENSE DIFFERENTIAL AND
RESERVE ALLOCATION

1. The income expense differential realized in the year is the result of the Vietnam Deposit Insurance Corporation's operations, determined by the difference between total income minus reasonable and valid expenses incurred in the year as stipulated in Section III of this Circular.

2. The distribution of income expense differentials of the Vietnam Deposit Insurance Corporation shall be carried out in accordance with Article 17 and Article 18 of the Financial Management Regulations for the Vietnam Deposit Insurance Corporation.

V. ACCOUNTING SYSTEM, STATISTICAL RECORDS, AUDIT
AND FINANCIAL PLANNING

1. The Vietnam Deposit Insurance Corporation implements the current accounting and statistical system and guidance documents issued by the Ministry of Finance.

2. The fiscal year of the Vietnam Deposit Insurance Corporation begins on January 1 and ends on December 31 of the Gregorian calendar.

3. Annually, the Vietnam Deposit Insurance Corporation has the responsibility to prepare and submit to the Ministry of Finance a financial plan that has been approved by the Board of Directors, including:

- Income and expenditure plan (accompanied by detailed explanations on each income and expenditure item and specific budgeted spending levels expected for the planning year).

- Basic construction and fixed asset acquisition plan (accompanied by detailed explanations on planned basic construction, fixed asset acquisitions, and balancing funding sources).

- Labor plan, wage-income.

The annual financial plan serves as the basis for the Vietnam Deposit Insurance Corporation to organize and implement during the year. During the fiscal year, if unforeseen external changes require adjustments to the annual financial plan, the Vietnam Deposit Insurance Corporation must submit supplementary reports to the Ministry of Finance.

The financial plan shall be submitted to the finance authority before November 15 of the year preceding the planning year.

4. Periodically (quarterly, annually) or when necessary, the Vietnam Deposit Insurance Corporation has the responsibility to submit financial reports to the Ministry of Finance, statistical agencies, and the State Bank of Vietnam.

4.1. Types of reports:

- Third-level account balance sheet.

- Accounting balance sheet (summary asset statement).

- Operating results report.

- Financial report explanation:

+ Changes in fixed assets.

+ Implementation of labor, wages-income

+ Situation of capital source increases and decreases, capital utilization

+ Situation of guarantees, loans, debt purchases.

+ Situation of establishing and using business reserve funds.

4.2. The Chairman of the Board of Directors and General Director of the Vietnam Deposit Insurance Corporation are responsible for the accuracy and honesty of these reports.

4.3. Reporting deadlines:

- Quarterly reports must be submitted no later than 30 days from the end of the quarter.

- Annual reports of the Vietnam Deposit Insurance Corporation, after being approved by the Board of Directors, must be submitted to the Ministry of Finance no later than 45 days from the end of the fiscal year.

5. Annually, based on the final financial report of the Vietnam Deposit Insurance Corporation, the Ministry of Finance will review and audit according to its role as a state management agency.

6. The Vietnam Deposit Insurance Corporation implements internal auditing in accordance with regulations.

VI. IMPLEMENTATION

- This Circular takes effect 15 days from the date of signature.

- In case of difficulties during implementation, please reflect them to the Ministry of Finance for study, consideration, and resolution.