Circular No. 371-TC/TTR guiding the implementation of the charter on the organization of financial inspection

CIRCULAR
Guidelines for Implementing the Charter on Financial Inspection Organization

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The Council of Ministers has just issued Decree No. 174-CP dated September 10, 1970 to promulgate the Charter on Financial Inspection Organization, replacing Decree No. 1077-TTg dated October 12, 1956 and all previous documents on financial inspection organization.

To assist provincial and municipal administrative committees in directing financial inspection work at the local level, this Circular is issued to guide the implementation of the newly promulgated Charter on Financial Inspection Organization.

I. MEANING OF THE ISSUANCE OF THE NEW CHARTER ON FINANCIAL INSPECTION

Since the complete liberation of the Northern region, our State has gradually issued financial policies and management systems suitable for the new situation in each period. Although these systems have not been fully developed, they have had a significant impact on concentrating and accumulating capital, mobilizing contributions from various social strata, reasonably distributing capital for economic and cultural development, managing and auditing the income and expenditure of state agencies, and contributing to the construction of socialist economic management methods.

Financial policy and system play a very important role in state administration and national economic management, thus they must be strictly enforced; otherwise, unhealthy phenomena will arise, adversely affecting economic construction and development as well as the consolidation and strengthening of new production relations.

To strengthen state financial management, it is necessary to enhance the supervisory function of the state financial agency over sectors, levels, and grassroots units, while promoting strict compliance with the audit system of superiors over subordinates within each sector and the accounting audit system as stipulated in the Charter on State Accounting Organization. However, merely enhancing financial supervision and accounting audits is insufficient, as these activities, although conducted regularly, lack the conditions to delve deeply and draw conclusions on all aspects of management issues. Therefore, it is necessary to strengthen financial inspection work. This is a crucial and urgent requirement to maintain centralized and unified state leadership over financial management, promptly prevent violations of financial policies, systems, and discipline, ensuring that state finances are continuously consolidated and that sector operations become increasingly regulated.

In response to the aforementioned requirements, the Council of Ministers has issued a new charter on financial inspection to clearly define the purpose of financial inspection, specifically outline the tasks and powers of the central, provincial, and municipal financial inspection boards, and establish principles and procedures for financial inspection work consistent with the new situation.

The new charter clearly defines the purpose of financial inspection as inspecting state financial management to ensure "strict compliance with financial policies, systems, and discipline in sectors, levels, and grassroots units, guiding state financial management and supervision in sectors, levels, and grassroots units to become more regulated, ensuring the rational and economical use of state labor, materials, and funds, yielding economic benefits or tangible advantages." Thus, financial inspection work not only promotes compliance with laws in managing state money and assets but also monitors and identifies whether their use is rational and yields the highest possible benefits. Therefore, it can be determined that effectively performing financial inspection work significantly contributes to state asset management, ensures the correct implementation of the state budget, and creates favorable conditions for economic development.

II. TASKS AND POWERS OF FINANCIAL INSPECTION

The new Charter clearly stipulates that financial inspectors shall inspect all state agencies, state-owned economic organizations, joint-stock enterprises, collective economic organizations, social organizations financially subsidized by the State (except for cases specifically provided for by the Prime Minister). Therefore, central financial inspectors can inspect all such agencies and organizations regardless of whether they are centrally managed or locally managed; provincial and city financial inspectors can inspect all agencies and organizations under local management. As for central facilities located in localities, based on the Financial Management Delegation Regulation No. 119-CP dated August 1, 1967, if the Provincial or City People's Committee identifies violations of financial policies, systems, and discipline, they should report to the Ministry of Finance, which will then dispatch central financial inspectors or delegate the task to local financial inspection boards depending on the situation. For collective economic organizations, the regular tasks of agencies directly responsible for managing collective economies include financial and accounting audits. Therefore, local financial inspection boards should conduct inspections of collective economic organizations with focus and emphasis on matters related to state finances (for example, cooperatives failing to fulfill their tax obligations to the State, or receiving processing orders from state-owned enterprises but attempting to reduce raw materials or colluding with officials to embezzle state assets and funds, causing losses to state finances, etc.).

The new Charter clearly and comprehensively defines the specific tasks of financial inspectors: inspecting the implementation of budgets by sectors and levels, the execution of revenue and expenditure plans by state-owned and joint-stock enterprises, the budget estimates of units, the protection and management of socialist property, the compliance with financial policies, systems, and discipline, accounting, credit, cash transactions, and other relevant policies, systems, and disciplines.

The new Charter also emphasizes the inspection of the work of financial agencies and banks as a primary task, aimed at identifying deviations in the implementation of financial policies and credit regulations to promptly correct them, while enhancing the training of staff in these agencies on policies and practices to improve their financial management and supervision over their respective sectors.

The powers granted by law to financial inspectors, as specified in the new Charter, ensure that financial inspectors have the conditions necessary to effectively carry out their assigned tasks.

The new Charter assigns the responsibility to inspected entities and related agencies to study, resolve, and respond to the recommendations of financial inspectors. This provision not only enhances the responsibility of financial inspectors in researching and proposing suggestions to help inspected entities strengthen and improve economic and financial management but also increases the accountability of inspected entities in adopting the recommendations of financial inspectors for the benefit of their own operations, sectors, and regions.

III. PRINCIPLES AND WORKING METHODS OF FINANCIAL INSPECTORS

The new Charter has clearly defined the principles and working procedures of the Financial Inspection Board. A fundamental improvement in the working method of local financial inspection organizations is that they must carry out their work according to a plan approved by the provincial or municipal administrative committee. The annual financial inspection plan, divided into quarters, must focus on key economic and financial management issues during each period at the locality and should refer to the plan of the central Financial Inspection Board. To enhance the effectiveness of financial inspections, it is necessary to comply with the provisions of Article 11 of the Charter: "each inspection must clearly define its purpose, requirements, and scope" and should only address certain specific aspects of financial work to be completed quickly and efficiently. It is necessary to overcome the previous situation where financial inspections were conducted without a plan, often responding to urgent requests, getting bogged down in some corruption investigations, attracting many staff for a long time, hindering the implementation of planned financial inspections with a focus and emphasis.

Combating corruption and waste for financial inspections mainly involves strengthening the supervision of compliance with financial regulations, rules, and discipline to promptly identify wrongful actions causing losses to state finances, thereby enhancing preventive effects and preventing corruption and waste from occurring. If there are suspicions of corruption during the inspection process, the issue must be investigated from multiple angles and usually takes a lot of time, which cannot be done solely through financial inspection methods. In such cases, the financial inspection board must report to the provincial or municipal administrative committee and transfer the task to competent agencies such as the police, prosecution... to organize separate investigations; if there are accounting issues that need clarification, an accounting expert should be assigned to assist. Depending on circumstances, conditions, and work requirements, the financial inspection board may or may not participate in these investigations, but will base conclusions on investigation and audit results to strengthen financial management. Doing so ensures that local financial inspections complete their approved plans effectively.

To create favorable conditions for local financial inspections to fulfill their assigned tasks while gradually improving the competence of local finance officers, it is necessary to strengthen close cooperation between the business units within the Finance Department and the local Financial Inspection Board. Each time an inspection is carried out, if deemed necessary, the Financial Inspection Board can request the Finance Department to assign capable and qualified management officers to participate in the inspection as specialists. This way, the full potential of the officers is utilized without increasing the staffing of the inspection organization, while also enhancing cooperation among units within the Finance Department to fulfill state financial management and oversight tasks.

IV. ORGANIZATION OF THE FINANCIAL INSPECTION MACHINE IN PROVINCES AND CITIES

The new Charter assigns the provincial or municipal administrative committees the responsibility to establish the organizational structure and staffing of the local Financial Inspection Board, after reaching agreement with the Minister of Finance.

Currently, there are local Financial Inspection Boards in operation. The issue at hand is to adjust the existing financial inspection organizations to align with the new Charter's provisions, ensuring that financial inspection organizations operate more effectively and successfully fulfill their assigned functions.

Below, the Ministry outlines several directions for improving the financial inspection machinery to meet the demands of the new tasks:

According to the new Charter, the objects and scope of financial inspection activities are very broad, covering various fields, requiring financial inspectors to have a relatively wide general knowledge and a deep understanding of specialized areas. Therefore, the local Financial Inspection Board's organizational structure should include several specialized work units (teams, groups, or officers) responsible for inspecting specific objects:

- A unit specializing in inspecting the finances of administrative and public service agencies (public cultural and social services, public economic services) and collective economic organizations;

- A unit specializing in inspecting the finances of production and business sectors such as industry, commerce... and enterprises and grassroots units under these sectors;

- A unit specializing in inspecting the work of financial and banking construction agencies (district and town finance offices, banking construction branches...) and related state financial operations of state banking agencies, savings funds, and credit organizations.

The principle is to assign specialized responsibilities to allow in-depth involvement in specialized work and experience accumulation, but at the same time, cooperation and coordination between units must be strengthened, exchanging experiences, disseminating them, and when there are key tasks, it is necessary to concentrate forces,调动人员从一个部门调到另一个部门以完成工作计划。

Regarding staffing, localities should base their arrangements on the tasks and workload of local financial inspections, adhering to the spirit of streamlining, prioritizing quality over quantity, aiming to make the machine lean, efficient, and highly effective. For small and medium-sized provinces, apart from the director and deputy director, 6 to 8 financial inspectors can be arranged; for large provinces and cities, 9 to 11.

To ensure that the financial inspection machinery operates effectively, the provincial and municipal administrative committees must carefully select officials according to the standards set forth in the new charter: "politically steadfast, with good morals and conduct, knowledgeable about financial and accounting practices." Financial inspectors should be chosen from among long-serving financial and banking officials who understand policies and regulations, have extensive work experience, are enthusiastic about the revolution and possess high combativeness, and adopt a deep and close working style, implementing tasks in accordance with mass line principles.

For the appointment of the head of the department, it is necessary to base the decision on the division of responsibilities between the director and deputy director of the bureau, between the general manager and deputy general manager, and the specific circumstances of each locality, to choose the most qualified person to specialize in inspection work. In cases where it is deemed necessary to appoint the director of the bureau or the general manager of the department as the head of the financial inspection department, a staff member with a level equivalent to that of the deputy director of the bureau or deputy general manager should be selected as the deputy head responsible for specialized inspection work because the director or general manager still has to undertake many other tasks and cannot focus all their attention and time on inspection work. If the deputy director of the bureau or deputy general manager of the department is appointed as the head of the department, this staff member must necessarily specialize and directly engage in financial inspection work.

The provincial and municipal administrative committees are requested:

- To widely disseminate the new charter on the organization of financial inspections down to the grassroots units so that everyone is aware and strictly adheres to it;

- To immediately promote in the last months of the year the development of proposals regarding the organization and staffing of local financial inspections: appointing the head and deputy head of the department, reassigning staff in accordance with the provisions of the new charter, and simultaneously establishing the operational system of the financial inspection department so that it can begin operations in the new direction as soon as possible. Proposals on organization and staffing, as well as lists of heads and deputy heads of financial inspections at the provincial and municipal levels, need to be sent to the Ministry as early as possible so that the Ministry can plan concentrated training for financial inspection staff;

- To instruct the financial inspection department to develop the 1971 financial inspection plan and submit this plan to the Ministry by December 1970;

- To issue directives to local departments to strengthen regular financial and accounting oversight and control over enterprises, organizations, and agencies under their jurisdiction, while creating every condition for local financial inspections to carry out their work smoothly.