Circular No. 29/1998/TT-BTC guides the financial management system for implementing the national reserve management regulations issued together with Decree No. 10/CP dated February 24, 1996 of the Government.

CIRCULAR

OF THE MINISTRY OF FINANCE NUMBER 29/1998/TT-BTC DATED MARCH 11, 1998 GUIDING THE FINANCIAL MANAGEMENT REGIME IMPLEMENTING THE REGULATION ON NATIONAL RESERVE MANAGEMENT ISSUED TOGETHER WITH DECREE NO. 10/CP DATED FEBRUARY 24, 1996 OF THE GOVERNMENT

To strengthen financial management work, ensure that funds for national reserve activities are used for their intended purposes effectively according to the State Budget Law.

After reaching consensus through discussions with the National Reserve Agency and relevant Ministries and sectors, the Ministry of Finance guides the financial management and disbursement regime of state budget capital for national reserve activities according to Government Decree No. 10/CP dated February 24, 1996 as follows:

I. GENERAL PROVISIONS

1. Financial sources for national reserve activities shall be guaranteed by the state budget including:

- Inventory goods reserve capital

- Capital for basic construction investment

- Regular operating expenses

2. The National Reserve Agency, Ministries, and sectors entrusted with managing national reserve goods (collectively referred to as reserve agencies); subordinate reserve storage bureaus under the National Reserve Agency and units under Ministries and sectors entrusted with managing and preserving national reserve goods (collectively referred to as reserve units) shall be responsible for managing and using state budget capital allocated for national reserve activities for their intended purposes effectively and economically, in accordance with current financial expenditure policies; they shall strictly manage and preserve national reserve goods entrusted by the State, keep them absolutely confidential regarding quantity, type, and value, prevent damage and loss, and always be ready to meet the highest demands in all situations.

3. Reserve agencies and reserve units must maintain complete accounting records to manage budget funds and national reserve goods according to the accounting system for administrative and public service units issued together with Decision No. 999-TC/QĐ/CĐKT dated November 2, 1996 of the Minister of Finance and Decision No. 393/QĐ-TCKT dated December 31, 1996 of the Director of the National Reserve Agency on issuing the national reserve accounting system. All units using state budget capital must open accounts at the State Treasury where transactions take place.

Quarterly and annually, higher-level reserve management agencies and reserve units must settle accounts for the capital and funds used according to the prescribed models and deadlines. They must report on the establishment and implementation of plans for the import, export, and inventory of reserve goods to relevant agencies as stipulated.

II. SPECIFIC PROVISIONS

1. Preparation of Budget Estimates:

a. Basis for preparing the state budget estimate:

Annually, management agencies base their estimates on the Prime Minister's Directive on the development plan and state budget estimate for the following year; Circulars guiding the preparation of the state budget estimate issued by the Ministry of Finance; the approved level of reserves for each type of goods or the reserve requirement (in cases where the government has not yet approved the reserve levels); the existing quantity of reserve goods, the quantity of reserve goods reaching their expiration date and needing to be replaced, projected prices, storage fees, purchase fees, sale fees, and current financial expenditure policies; the National Reserve Agency issues guidance and assigns check numbers for the state budget estimate to subordinate reserve storage bureaus.

Management agencies and reserve units base their estimates on these guidance documents to prepare necessary budgets for purchasing reserve goods, storage fees, purchase fees, sale fees for reserve goods, and costs to ensure the operation of the reserve management machinery; capital for basic construction investment.

b. Procedure for preparing the annual state budget estimate:

Reserve material units under Ministries and sectors prepare state budget estimates for purchasing reserve goods, purchase fees, and storage fees for reserve materials and submit them to their principal Ministries. Principal Ministries consolidate and submit them to the National Reserve Agency, the Ministry of Finance, and the Ministry of Planning and Investment.

Units directly under the National Reserve Agency base their estimates on the above regulations and guidance from the National Reserve Agency to prepare state budget estimates for purchasing reserve goods, purchase fees, storage fees, operational costs, and capital for basic construction investment and submit them to the National Reserve Agency.

The National Reserve Agency reviews and consolidates the state budget estimates of its subordinate units to prepare the state budget estimate for the National Reserve Agency and consolidate the state budget estimates for purchasing reserve goods, purchase fees, and storage fees of Ministries and sectors to submit to the Ministry of Finance and the Ministry of Planning and Investment.

The Ministry of Finance and the Ministry of Planning and Investment consolidate these estimates into the state budget revenue and expenditure plan to submit to the Government for approval by the National Assembly.

2. Allocation of approved state budget estimates.

a. Allocation of approved state budget estimates:

After being assigned state budget estimates by the Government, the National Reserve Agency and Ministries are responsible for allocating the assigned state budget estimates to reserve units using the budget according to the items in the state budget and the structure of expenditures for purchasing reserve goods, storage fees (detailed by item), operational costs, and basic construction investment (if applicable). Allocation documents for state budget estimates to budget-using units are sent to the Ministry of Finance and the State Treasury where the unit conducts transactions.

The Ministry of Finance is responsible for reviewing the allocation of state budget estimates by units. If it finds the allocations inappropriate, it will request the Ministries and sectors to reallocate the state budget estimates appropriately.

b. Disbursement of funds:

Reserve units base their quarterly budget expenditure estimates on the annual funding limits allocated to them, send them to their superior management units. Superior management units consolidate and send quarterly estimates to the Ministry of Finance, simultaneously sending them to the State Treasury where transactions take place.

The Ministry of Finance bases its budget expenditure estimates on those of the principal management units and the budget's capacity, processes the procedures to notify funding limits to the principal management units so that they can notify funding limits to reserve units. The direct disbursement of funds to budget-using units will be carried out according to Circular No. 09 TC/NSNN dated March 18, 1997 of the Ministry of Finance.

Based on the allocated expenditure limit, the head of the budget-using unit issues a standard expenditure order, accompanied by payment documentation sent to the State Treasury where transactions take place.

The State Treasury where transactions take place bases its actions on the expenditure limit notification from the superior principal management unit, checks the legality of the payment documentation, conditions for expenditure, and the standard expenditure order from the head of the budget-using unit to carry out the disbursement of funds and settlement of expenditures.

c. Adjustment of state budget estimates.

In case the Government issues a decision to adjust the state budget plan or the National Reserve Agency, relevant ministries and sectors need to adjust the state budget plan for their subordinate units, then the National Reserve Agency and relevant ministries and sectors must submit a document explaining the reasons for the adjustment of funds to the Ministry of Finance. The reallocation of the state budget will be carried out after receiving the agreement document from the Ministry of Finance.

In cases where reserve agencies use the state budget and it is necessary to rearrange expenditures to meet essential requirements, the head of the unit must prepare a plan to adjust and report to the National Reserve Agency. The National Reserve Agency will consolidate these plans and submit them to the Ministry of Finance. Implementation can only proceed after receiving the agreement document from the Ministry of Finance.

3. Purchasing national reserves.

Funds for purchasing national reserve goods include the state budget allocated annually by the Ministry of Finance according to the Prime Minister's approval and the retained revenue from debt recovery or sales of reserve goods kept in the State Treasury account.

Before implementing the purchase of national reserve goods, the reserve agency must submit a request document detailing the type of goods needed (specifications, quality, quantity), price or price range, purchase location, and purchase deadline to the National Reserve Agency, the Government Price Board, the Ministry of Finance, and the Ministry of Planning and Investment.

Based on the request documents from the reserve agencies, the Government Price Board, in collaboration with other members of the bidding committee, decides the maximum purchase price (purchase price at the national reserve warehouse gate) for each type of good and each purchase period.

When applying the government's bidding regulations for purchasing national reserve materials, specific procedures are as follows: The reserve agency establishes the bidding committee and serves as its chairperson. Committee members include representatives from the Ministry of Planning and Investment, the Ministry of Finance, and the Government Price Board (for bidding committees of other ministries and sectors managing national reserve goods, there is also a representative from the National Reserve Agency). For certain special types of national reserve goods that cannot yet implement bidding regulations, the head of the reserve agency must submit a document requesting the Prime Minister's approval to apply tendering or direct award methods. For national reserve foodstuffs (rice, grain) that cannot be purchased centrally and must be directly purchased from farmers, based on the maximum purchase price set by the Government Price Board, the reserve unit coordinates with the local Department of Finance and Price Control to determine a purchase price close to the market price at the time of purchase.

Payment of funds for purchasing national reserve goods can only be made when all of the following conditions are met:

- Plan to increase reserves or decisions of the Prime Minister.

- Decision to assign purchase plans by the head of the reserve agency.

- Bidding documents or a document from the Prime Minister in cases of tendering or direct award for each type of good and each purchase period.

- Purchase contract for national reserve goods.

- Purchase funds must be included in the quarterly state budget approved by the competent authority or in the proceeds from selling national reserve goods deposited in the State Treasury.

- Authorized by the head of the unit to approve payment.

- Legal and valid invoices and documents related to the purchase.

In cases of direct purchases from farmers, payment is based on legal and valid invoices and documents.

4. Selling national reserve goods.

Based on the quantity of goods sold recorded in the plan and the selling price range set by the Government Price Board, the reserve agency guides the implementation by the reserve units.

Sales of national reserve goods are conducted through public bidding, with selling fees determined by the Government Price Board. If conditions for organizing a public bidding process are not met, and wide-ranging sales to various entities are required, this decision is made by the head of the reserve agency who bears responsibility before the Prime Minister; the selling price is determined by the Government Price Board.

Proceeds from the sale of national reserve goods, after deducting selling fees as prescribed, must be fully deposited into the State Treasury and can only be used to purchase national reserve goods according to the approved plan. The State Treasury allocates funds to pay for the purchase of goods according to point 3, part II of the Circular. At year-end, any unused funds must be deposited into the state budget (except in cases where the Prime Minister permits retention). Strictly prohibited is the misuse of proceeds from the sale of national reserve goods for purposes other than intended.

In cases where national reserve goods are damaged or deteriorate due to natural disasters, fires, etc., requiring immediate handling, the head of the reserve agency must instruct the preparation of complete legal documentation and immediate action to minimize losses; subsequently, the cause must be clarified, responsibilities assigned, and reported to the Prime Minister, copied to the National Reserve Agency, the Ministry of Finance, and the Ministry of Planning and Investment. Any proceeds from such sales must be deposited into the State Treasury.

5. Management of purchase and sale fees for national reserve goods.

- Purchase fees for national reserve goods are expenses incurred during the procurement and warehousing process, such as loading and unloading fees, weighing, inspection, etc. Purchase fees are allocated according to the progress of purchasing national reserve goods.

- Sale fees for national reserve goods are expenses incurred during the sales process, such as costs for loading onto buyer's transportation, promotional activities, etc., which are deducted from the sale proceeds. In cases where goods are dispatched without charge or on loan according to the Prime Minister's decision, the dispatch costs are borne by the recipient unit according to the sale fee rate for similar goods set by the Government Price Board (unless the Government decides that dispatch does not require payment, in which case the dispatch fee is deducted from the sale proceeds of the unit for that year according to the sale fee rate for that item or similar goods set by the Government Price Board).

Purchase and sale fees for national reserve goods are established by the Government Price Board after receiving written comments from relevant ministries and sectors.

6. Management of storage fees for national reserve goods.

a. Storage costs are determined based on the average monthly or quarterly volume of stored goods and the storage cost standards set by the competent state authorities. Storage cost standards are issued by the Ministry of Planning and Investment after receiving written comments from members of the national standard-setting council, based on the storage procedures and norms for each type of good.

b. Allocation of storage costs for national reserve goods.

The allocation of funds for the preservation of state reserve goods shall be detailed according to each type of goods and each unit assigned the preservation task; The bases for allocating preservation fees include:

- The approved annual budget for preservation expenses.

- The report on the implementation of preservation expenses in the previous quarter.

- The quarterly budget for preservation expenses broken down by month.

Monthly or quarterly, the Ministry of Finance will notify the ceiling of preservation funds to storage agencies; Storage agencies allocate these funds to storage units and simultaneously send them to the State Treasury where transactions take place. The head of the storage unit issues an order to approve payment based on the notified ceiling, along with the settlement documentation sent to the State Treasury where transactions occur. The State Treasury checks the legality of the settlement documentation and the order issued by the head of the unit before making payments to the storage unit for the service providers. Units are responsible for strict management, using funds for their intended purpose, saving costs while preserving goods according to technical procedures to prevent loss, damage, and deterioration of stored goods.

To encourage storage units to strive to save purchase, sale, and regular preservation fees for state reserve goods; Based on the fee levels set by the Government Price Board regarding purchase and sale fees for state reserve goods for each type of goods at different times, the Ministry of Planning and Investment sets the regular preservation fee level for state reserve goods. If a storage unit saves on purchase, sale, and regular preservation fees (due to its own efforts), it will enjoy 70% of the saved fees to establish two reward and welfare funds, with a maximum not exceeding three months' salary of the unit; The amount allocated to each fund is decided by the head of the storage unit after consultation with the trade union organization. The remaining 30% will be supplemented to the storage unit's budget for the planning year.

Units must separately account for all types of fees in accordance with current financial regulations; Reward for savings can only be implemented after the annual settlement of the National Reserve Corporation has been approved according to the prescribed system and after offsetting excess management costs for purchasing, selling goods, and regular preservation costs (if any). In cases of improper expenditures, the storage unit must compensate and pay the entire improperly spent amount into the State Budget.

For storage units that are state-owned enterprises performing state reserve tasks, the savings in fees compared to the quota will be reflected in the business results of the enterprise and applied to profit distribution systems like other business activities of the enterprise. In cases of improper expenditures, the storage unit must compensate and pay the improperly spent amount into the State Budget.

7. Management and Allocation of Funds to Ensure Organizational Operations:

The management and allocation of funds to ensure the operations of the National Reserve Corporation shall be carried out in accordance with Circular No. 09 TC/NSNN dated March 18, 1997, issued by the Ministry of Finance, guiding the implementation of Decree No. 87/CP dated December 19, 1996, of the Government detailing the delegation of management, preparation, execution, and settlement of the state budget. Units purchasing assets and equipment must organize bidding in accordance with Decision No. 20-TC/KBNN dated January 17, 1996, issued by the Minister of Finance.

For internal inventory materials and fixed assets that need liquidation of subordinate Reserve Corporations; Each Reserve Corporation must establish a Liquidation Committee in accordance with current regulations. All proceeds from liquidation, after deducting liquidation costs, must be deposited into the State Budget in accordance with current regulations. When the National Reserve Corporation needs to purchase equipment and tools for storage, repair warehouses..., the National Reserve Corporation prepares a budget and sends it to the Ministry of Finance for review and resolution in accordance with the prescribed system.

8. Regarding the Allocation of Capital for Basic Construction Investment:

Units allocated capital for basic construction investment by the state budget must comply with current regulations on the management, allocation, and settlement of basic construction investment capital.

9. Some Provisions on the Entry and Exit of Reserve Goods:

a. Entry of Reserve Goods:

- Entry of newly purchased reserve goods: The reserve goods unit records the value of the entry according to the purchase price plus (+) the entry fee.

- Entry of reserve goods recovered from loans (lending): Recovery of debts must ensure the quantity and quality of goods when lent out; When a borrowing unit or organization returns borrowed goods, the reserve goods unit records a debit to Account 156 "Reserve Materials and Goods" and a credit to Account 158 "Goods Lent Out for Reserve" at the original entry price of the reserve goods when lent out. The entry fee for recovered loaned goods must be paid by the borrowing agency or unit.

In cases where the borrower repays in cash according to the decision of the competent authority, the recovery price of the loaned goods is calculated according to the price determined by the competent authority for each type of reserve goods. The unit records a debit to Account 514 "Revenue from Reserve Goods" and a credit to Account 158 "Goods Lent Out for Reserve" at the cost price of the lent-out reserve goods. Simultaneously, the unit records an increase in the reserve source for the difference between the repayment amount and the cost price of the lent-out reserve goods if the repayment amount exceeds the cost price, or a decrease in the reserve source if the repayment amount is less than the cost price.

- Internal transfer of reserve goods between storage areas: The receiving unit records the value of the entry according to the exit price of the sending area (based on the purchase price at the time of entry).

- Surplus reserve goods during the preservation process: The storage agency increases the national reserve source according to the entry price of the same type of goods lot.

b. Exit of Reserve Goods:

- Exit of reserve goods for sale according to plan or by Prime Minister's Decision: The reserve goods unit reduces the value of reserve goods according to the entry price of the sold reserve goods. Any difference between the revenue from the sale of reserve goods and the difference between the entry price and the sale fee, if the latter exceeds the revenue from the sale of reserve goods, is recorded as a reduction in the reserve capital (The sale price of reserve goods is determined by auction results as stipulated in Point 4, Part II, and the sale fee is regulated by the Government Price Board).

- Exit of reserve goods for lending according to Prime Minister's Decision: The reserve goods unit records a debit to Account 158 "Goods Lent Out for Reserve" and a credit to Account 156 "Reserve Materials and Goods" (Detailed by each borrower and each type of goods) at the entry price of the lent-out reserve goods. The lending fee is borne by the borrowing unit.

- Goods exported without payment according to the Decision of the Prime Minister: Based on the decision of the competent authority, the storage unit records a reduction in reserve sources at the purchase price. The fee for exporting goods is paid by the receiving unit.

- Goods exported from the warehouse due to poor quality: Based on the decision of the competent authority, the storage unit records a reduction in inventory value at the purchase price of the stored goods; the difference between the warehouse purchase price at the time of occurrence of substandard goods and the amount recovered after deducting export costs and disposal costs (if any), the storage unit records this difference in the receivable account. After clarifying the cause and responsibility of the person responsible, the competent authority decides on the handling, then the storage unit records this difference according to the decision of the competent authority.

- For reserve goods within the quota loss: Based on the decision of the head of the storage agency, the storage unit records a reduction in the national reserve fund at the purchase price of that item, and reports the final settlement with the Ministry of Finance at year-end.

- In case of discovering missing reserve goods in the warehouse, reserve goods exceeding the quota loss: Based on the decision of the competent authority, the storage unit processes the accounting reduction in inventory at the purchase price of the missing reserve goods, and excess loss outside the quota. At the same time, record the receivable account at the purchase price at the time of occurrence of the missing reserve goods. After clarifying the cause and responsibility of the person responsible, the competent authority decides on the handling according to the decision of the competent authority.

All cases of surplus goods during storage, export of reserve goods without payment, differences in price increases and decreases during import and export; shortages, losses, damage, and excess loss outside the quota after being handled by the authorized agency, the storage agencies may record corresponding increases or decreases in reserve funds in the final settlement report with the Ministry of Finance.

10. Regarding budget settlement.

Every quarter and annually, all units managing state reserve goods must settle accounts for the funds used according to the prescribed forms, deadlines, and send them to the designated recipient as stipulated in Decision No.: 999-TC/QĐ/CĐKT dated November 2, 1996 of the Minister of Finance on the issuance of the system of administrative and public institution accounting regulations and Decision No.: 393-QĐ/TCKT dated December 31, 1996 of the Director of the State Reserve Agency on the issuance of the system of state reserve goods accounting regulations.

Storage units under ministries and sectors submit the settlement report to the principal ministry, the Ministry of Finance, and the State Reserve Agency.

Subordinate units of the State Reserve Agency submit the settlement report to the State Reserve Agency and the Ministry of Finance.

The State Reserve Agency and ministries and sectors cooperate with the Ministry of Finance to review and approve the settlement for subordinate storage units, and compile the report to the Ministry of Finance.

The Ministry of Finance is responsible for auditing and announcing the approval of the consolidated settlement to the State Reserve Agency and ministries and sectors so that the State Reserve Agency and ministries and sectors can officially announce the approval of the settlement for subordinate storage units according to current regulations.

III. IMPLEMENTATION

This Circular takes effect fifteen days from the date of signature and replaces Circular No.: 72-TC/VI dated August 26, 1994 of the Ministry of Finance.

During implementation, if there are any difficulties, please reflect them to the Ministry of Finance for consideration and appropriate amendments.