Circular No. 40/1998/TT-BTC guides the management, allocation, and settlement of state budget expenditures through the State Treasury.

 

CIRCULAR

Guidelines for the management, allocation, and settlement of budget expenditures through State Treasury

Implementing Decree No. 87/CP dated December 19, 1996 of the Government detailing the decentralization of budget management, preparation, implementation, and settlement; the Ministry of Finance has issued Circular No. 20 TC/KBNN dated April 25, 1997 guiding the management, allocation, and settlement of budget expenditures through State Treasury.

After a period of implementation, to perfect the mechanism and adapt to actual conditions, the Ministry of Finance guides the management, allocation, and settlement of budget expenditures to replace Circular No. 20TC/KBNN dated April 25, 1997 as follows:

1\. All budget expenditures must be inspected and controlled before, during, and after the allocation and settlement process. Expenditures must be included in the approved state budget estimates, comply with regulations, standards, and quotas set by the competent authorities of the State, and have been approved by the head of the budget expenditure using entity.

I. GENERAL PROVISIONS

2\. All agencies, units, project leaders... utilizing state budget funds (hereinafter referred to collectively as budget expenditure using entities) must open accounts at State Treasury; they are subject to inspection and control by financial authorities and State Treasury during the preparation of budget estimates, allocation of limits, allocation, settlement, accounting records, and budget settlement.

3\. The Ministry of Finance, Provincial Departments of Finance and Prices, District and County Financial Offices under provincial and municipal levels (hereinafter referred to collectively as financial authorities) are responsible for reviewing budget estimates and notifying quarterly budget limits to budget expenditure using entities; inspecting the use of funds, examining and approving expenditure settlements of these entities, and compiling state budget expenditure settlements.

4\. State Treasury is responsible for supervising documents, vouchers, expenditure conditions, and promptly implementing allocations and settlements of state budget expenditures in accordance with regulations; participating with financial authorities and competent state management agencies in inspecting the use of state budgets and confirming actual state budget expenditures of entities through State Treasury.

State Treasury has the right to temporarily suspend, refuse to settle payments, and notify budget expenditure using entities and send to the corresponding level financial authority for resolution in the following cases:

- Expenditure not in accordance with the purpose and target as approved in the budget estimate.

- Expenditure not in compliance with regulations, quotas, and state financial expenditures.

- Lack of conditions for expenditure as stipulated in this Circular.

5\. All state budget expenditures shall be recorded in Vietnamese Dong according to each fiscal year, each level of budget, and the state budget classification. State budget expenditures in foreign currency, goods, and labor days shall be converted and recorded in Vietnamese Dong according to exchange rates, prices of goods, and labor day rates prescribed by the competent authority.

6\. During the management, allocation, and settlement of state budget expenditures, incorrect expenditures must be recovered and reduced. Based on the decision of the financial authority or the competent state authority, State Treasury will implement the recovery and reduction of state budget expenditures.

1\. Conditions for allocation and settlement.

II- SPECIFIC PROVISIONS

State Treasury will only allocate and settle state budget expenditures when the following conditions are met:

1.1\. Included in the approved annual state budget estimate.

- In cases where there is no officially approved state budget estimate, allocation and settlement will be based on provisional funding provided by the financial authority.

- In cases of unexpected expenditures outside the approved estimate that cannot be delayed such as expenditures for disaster relief, fire fighting, etc., allocation and settlement will be based on decisions of the competent authority.

1.2\. Comply with state budget expenditure regulations, standards, and quotas established by the Government or competent state authorities.

1.3\. Approved by the financial authority or the head of the budget expenditure using entity or authorized person.

+ For expenditures directly allocated by the financial authority, the approval order is the "Payment Order" of the financial authority. The financial authority is responsible for inspecting and controlling the content and nature of each expenditure to ensure the conditions for state budget allocation as prescribed. State Treasury is responsible for settling and paying the budget expenditure using entity according to the content recorded in the "Payment Order" of the financial authority.

+ For expenditures within the notified budget limit by the financial authority, the approval order is the "Budget Limit Withdrawal Form" of the budget expenditure using entity. The withdrawal form must clearly indicate:

. The entity issuing the approval order (budget expenditure using entity)

. Amount in figures and words

Expenditure items

. State budget classification.

. Signature of the head (or authorized person) and chief accountant (or authorized person) of the entity issuing the approval order.

1.4\. Have all relevant documents.

Depending on the nature of each expenditure, settlement documents include:

a\. For salary and allowance expenditures:

+ Staff establishment and salary fund registration table approved by the competent authority.

+ List of individuals receiving salaries and allowances.

+ Increase and decrease staff establishment and salary fund table approved by the competent authority (if applicable).

b\. For scholarships and living expenses of students:

+ Scholarship and living expense registration table for students approved by the competent authority.

+ Increase and decrease scholarship and living expense table approved by the competent authority (if applicable).

c\. For procurement of equipment, office supplies, working tools, minor repairs:

+ Quarterly procurement, construction, and minor repair budget approved by the competent authority.

+ Decision approving tender results by the competent authority (for procurement of equipment, working tools, construction, and repairs requiring tendering as prescribed).

+ Purchase contract for goods and services.

Article on sale and purchase of goods, services.

+ Price quotation sheets from goods and service providers; sales invoices for materials and equipment; construction and repair price notifications issued by authorized agencies (for cases where bidding is not conducted).

+ Other relevant documents such as checks, payment orders...

d. For other regular expenses:

+ Quarterly regular expense budget (divided by month).

+ A list of expense vouchers signed by the head and chief accountant (or authorized representative) of the unit (model number 01/TT attached).

+ Monthly regular expense settlement report according to each category of expenditure.

2- Pre-payment and payment control before disbursement:

2.1- When there is a need for expenditure, the entity using state budget funds sends the State Treasury at the transaction location the following related payment documents and files:

- Authorization to spend.

- Checks, payment orders.

- Other documents depending on the nature of each expenditure item as specified in point II.1.4 above.

2.2- The State Treasury reviews the expenditure documents of the entity, including:

- Checking and comparing expenditures with the budget to ensure that all expenditures must be included in the approved budget.

- Checking and comparing expenditures with the financial limit announced by the finance agency or superior management agency authorized by the finance agency, ensuring that all expenditures must have a financial limit allocated by the finance agency or authorized body.

- Reviewing and controlling documents and vouchers according to regulations for each type of expenditure.

- Reviewing and controlling expenditures to ensure compliance with national financial expenditure standards and norms.

For expenditures without national financial expenditure standards and norms, the State Treasury reviews and controls according to the approved expenditure budget of the entity by the authorized body.

- Reviewing and controlling accounting factors to ensure compliance with the National Budget Chart of Accounts.

- Verifying the signatures and seals of the authorizer (or authorized representative), chief accountant (or authorized representative) to match the registered samples at the State Treasury.

2.3- After reviewing and controlling the expenditure documents of the entity, the State Treasury processes:

- If all conditions for expenditure are met as prescribed, the State Treasury proceeds with the advance payment or payment procedures for the entity.

- If the conditions for expenditure are not met, the State Treasury may refuse to disburse or pay and return the expenditure documents to the entity while informing the co-level finance agency and higher-level State Treasury (model number 02/TT attached) for coordination in handling. The head of the State Treasury is responsible for the disbursement, payment, or refusal to disburse and pay.

3- Methods of disbursement and payment:

Disbursement and payment are carried out in two forms: advance payment and direct payment.

3.1- Advance payment:

a- Recipients of advance payments:

- Administrative expenses.

- Purchases of assets, small-scale construction and repairs that do not meet the conditions for direct payment or advance payment under contracts.

b- Amount of advance payment:

- The amount of advance payment depends on the nature of each expenditure item as requested by the entity using state budget funds; the maximum advance payment amount in a quarter or month shall not exceed the expenditure limit for that quarter or month announced by the authorized body for each category of expenditure.

c- Advance payment procedure:

- The entity using state budget funds submits related documents and materials to the State Treasury along with a request to withdraw the financial limit specifying the details of the advance payment so that the State Treasury can process the advance payment and monitor it during settlement, specifically:

+ For asset purchases, construction, and minor repairs:

. Quarterly procurement and minor repair budget approved by the authorized body.

. Decision approving the tender results by the authorized body (for procurement of equipment, work tools, construction, and repairs that require bidding as stipulated).

. Purchase and service contracts.

+ For other regular expenses:

. Quarterly regular expense budget (divided by month) approved.

. Report on the settlement of regular monthly expenses according to each category of expenditure.

. Other documents such as: financial limit withdrawal requests, payment orders, checks...

- The State Treasury reviews and controls the contents of the documents and materials and processes the advance payment for the entity.

d- Settlement of advance payment:

- After making the expenditures, the entity is responsible for submitting a payment request form (model number 03/TT attached) along with related expenditure documents and vouchers as specified in point II.1.4 above to settle the advance payment and convert it to direct payment.

- The State Treasury reviews and controls the actual expenditure report of the entity, if the conditions are met, it will proceed with direct payment and recover the advance payment.

+ If the payment amount exceeds the advance payment amount, the entity using the budget must issue a financial limit withdrawal request (for the additional amount). Based on the approved payment request and the supplementary financial limit withdrawal request, the State Treasury processes the conversion from advance payment to direct payment and provides the additional amount to the entity.

+ If the payment amount is less than the advance payment amount; based on the approved payment request, the State Treasury processes the conversion from advance payment to direct payment.

- In cases where the advance payment has not been settled, entities can settle it in the following month or quarter. All advance payments must be settled within the adjustment period of the final settlement. After the adjustment period, any unsettled advance payments will be reported by the State Treasury to the co-level finance agency or reported to the higher-level State Treasury (for expenditures under the higher-level budget) to deduct from the next year's allocation or reduce the state budget expenditure according to the decision of the finance agency.

3.2- Direct payment:

a. Recipients of direct payment include:

- Salaries and allowances.

- Scholarships and living expenses.

- Expenditures meeting the conditions for direct payment.

- Advance payments meeting the conditions for conversion to direct payment.

b. Amount of direct payment:

The level of payment disbursement is based on the budget expenditure documents and vouchers submitted by the budget expenditure units according to their request. The maximum monthly, quarterly, or annual payment disbursement level shall not exceed the limit announced by the competent authority within the approved state budget estimate for the year.

c. Procedures and formalities for payment disbursement:

- When there is a need for payment disbursement, budget expenditure units shall submit relevant financial documents and payment vouchers to the State Treasury.

- The State Treasury shall examine and control the legality and validity of the documents and vouchers; compare them with the approved budget estimates and funds provided by the competent authority; if they meet the conditions as stated in point II.1 above, direct payment shall be made to the suppliers of goods and services or paid through the unit.

d. Control and retention of vouchers at the State Treasury

- For direct payments made by the State Treasury, the unit must submit all related documents and vouchers to the State Treasury for control purposes. The State Treasury will check the documents and vouchers, stamp "Paid" and return them to the unit. The State Treasury will only retain the approved budget estimates, personnel registration forms, salary funds, scholarships, living allowances, purchase contracts for goods and equipment, bidding records for construction and repair of assets, payment price lists.

- For advance payment settlements: Upon settlement, budget expenditure units shall base on the original vouchers for each expense item to prepare the "List of Payment Vouchers" (Form No. 01/TT attached) and send it to the State Treasury; the State Treasury will check, control, and retain one list of payment vouchers in the accounting file (expense control). The budget expenditure unit is responsible for the legal validity of the list of payment vouchers.

4- Methods of disbursement and payment for certain major expenses:

4.1- Disbursement and payment of regular expenses for administrative and public service units.

a- Salaries and salary-like amounts, scholarships, living allowances:

- Monthly, based on the payroll and allowance list, scholarship, and living allowance list compared with the personnel registration form for the salary fund, scholarship, and living allowance year or adjusted registration form (divided into quarters or months) approved by the competent authority along with the unit's limit withdrawal notice, the State Treasury will make payment disbursements to the unit for payment to the beneficiaries. The maximum level of payment shall not exceed the approved (or adjusted) salary fund, scholarship, and living allowance and the limit of funds announced by the competent authority.

b- Purchases of office supplies, equipment, work tools, minor repairs, and constructions:

- The State Treasury will examine and control the expenditure documents and vouchers (as stipulated in point II.1 above); if the conditions are met, payment procedures will be carried out. Based on the limit withdrawal notice accompanied by a payment authorization or transfer check from the budget expenditure unit, the State Treasury will directly pay the supplier of goods and services through the bank account opened at the bank (or the State Treasury).

- In cases where the expenditures do not meet the conditions for direct payment, the State Treasury will provide advance payments to the budget expenditure unit.

+ Based on the limit withdrawal notice clearly stating the advance payment content accompanied by a payment authorization or check from the budget expenditure unit, the State Treasury will provide advance payments to transfer money to the supplier of goods and services through the bank account opened at the bank (or the State Treasury) or provide the budget expenditure unit to enable the unit to pay the supplier of goods and services.

+ After making the expenditure, the budget expenditure unit is responsible for settling the advance payment according to regulations: the unit sends invoices and vouchers to the State Treasury for settlement of the advance payment. Based on the unit's advance payment settlement request accompanied by other related documents, the State Treasury will check and control; if the conditions for payment are met as stipulated in point II.1 above, the procedure will be carried out to convert from advance payment to payment disbursement.

c- Other regular expenses:

- For expenses that can be settled directly (such as communication fees, public service fees...), the State Treasury will check and control the documents, vouchers, and conditions for expenditure according to regulations and make direct payments to the supplier of goods and services.

- For expenses that cannot be settled directly: based on the approved annual and quarterly budget estimates, the limit of funds announced by the competent authority, and the unit's limit withdrawal notice clearly stating the advance payment content, the State Treasury will implement monthly advances. Budget expenditure units must carry out spending and bear responsibility for the unit's spending decisions, ensuring compliance with current national financial expenditure standards and purposes.

- At the beginning of the following month, no later than the 5th day of each month, budget expenditure units must report the actual expenditure of the previous month to the State Treasury along with a list of related expenditure vouchers; the State Treasury will check and control; if the conditions for payment are met, the procedure will be carried out to convert from advance payment to payment disbursement and retain one copy of the list of payment vouchers.

The State Treasury will only provide advance payments for the next month if the unit has settled the advance payment of the previous month.

4.2- For economic public service expenses, program, and project expenses:

a- For economic public service expenses, program objectives, and projects tied to management tasks of ministries, sectors, and localities that have been approved by the managing agency and the competent authority has announced the quarterly funding limit, the State Treasury will implement disbursement and payment according to the provisions in point II.4.1 above.

b- For special nature economic public service funds (such as programs 327, 773, 120, Settled Land, People's Forest Rangers, Geological Fund, Railway Infrastructure, Maritime Safety Assurance) will be implemented according to separate documents prescribed by the Ministry of Finance.

4.3 Regarding budgetary expenditures for loans:

- For budgetary loan expenditures, the financial authority transfers the source of funds to the agency tasked with lending or transfers money according to the loan contract to the borrowing entity in cases of direct lending.

- The agency tasked with lending or the financial authority in cases of direct lending is responsible for managing, lending, recovering principal and interest, and settling accounts in accordance with prescribed regulations.

- For recovered loans, the agency tasked with lending shall remit to the state budget or use for further lending as decided by the competent authority.

4.4 Regarding budgetary expenditures for debt repayment:

a- Repayment of foreign debts: (for the central government budget)

- Based on the budget estimate for debt repayment and payment requests, the financial authority issues a "payment order" to transfer to the State Treasury for debt repayment; based on the "Payment Order" from the financial authority, the State Treasury processes the withdrawal of budget funds for foreign debt repayment.

- In cases where foreign debt repayment is made in foreign currency, it shall be carried out in accordance with point 4.6 of this Circular.

b- Repayment of domestic debts:

- Debts related to government treasury bills and bonds issued by the State Treasury:

+ For government treasury bills and bonds auctioned through the State Bank: based on the request of the State Treasury, the financial authority issues a "Payment Order" for the State Treasury to withdraw funds and pay the State Bank when due.

+ For government treasury bills and bonds directly issued by State Treasury units (including early payments): the State Treasury makes direct payments and settlements to the bill and bond purchasers and settles accounts with the state budget.

+ For local construction bonds (under the responsibility of the local government budget): when due for repayment, the provincial or municipal finance and price bureaus issue a "Payment Order" to transfer funds to the State Treasury for repayment.

- Other domestic debt repayments: the State Treasury implements payments according to the financial authority's "Payment Order."

4.5 Regarding expenditures for activities of the Communist Party of Vietnam, political-social organizations, and social-professional organizations:

+ In cases where the financial authority allocates quarterly funding through a budget limit, the State Treasury disburses and pays according to the provisions at point II.4.1 above.

+ In cases where the financial authority allocates funding through a "Payment Order," the State Treasury pays the budget-funded entity according to the financial authority's "Payment Order."

4.6 Foreign Currency Expenditures:

a- Expenditures in foreign currency from the centralized foreign exchange fund managed by the Ministry of Finance (Central State Treasury):

- The allocation and payment of foreign currency expenditures are carried out as follows:

+ The Ministry of Finance issues a "Payment Order" in Vietnamese dong (the amount on the "Payment Order" is the equivalent foreign currency amount to be paid, multiplied by the accounting exchange rate specified by the Ministry of Finance).

+ Based on the Ministry of Finance's "Payment Order" and the approval notice of the budget estimate, the Central State Treasury withdraws the centralized foreign exchange fund to make payments to the entity.

- Specifically, for allocations to overseas delegations from central budget entities, based on the characteristics of the delegation, the allocation process is divided into two steps:

+ Advance allocation: The Department of Foreign Financial Affairs (Ministry of Finance) issues an advance allocation "Order" in foreign currency, transferred to the Central State Treasury; based on the foreign currency advance allocation "Order," the Central State Treasury processes the withdrawal of the centralized foreign exchange fund for the advance allocation to the entity, while simultaneously recording the advance allocation balance in the central government's foreign exchange fund.

+ Final payment: After the delegation completes its mission and returns, settlement is conducted with the Ministry of Finance according to the regulations. Based on the "Payment Order" and the approval notice of the settlement, the Central State Treasury processes the central government budget payment, and simultaneously pays the foreign currency advance allocation. If the advance allocation exceeds the final payment, the Department of Foreign Financial Affairs (Ministry of Finance) is responsible for requiring the entity to return the difference to the centralized foreign exchange fund; if the final payment exceeds the advance allocation, the Central State Treasury processes additional allocation to the entity for the difference.

b- Purchasing foreign currency from banks:

In cases where the centralized foreign exchange fund does not have sufficient foreign currency for direct expenditure (central budget) and for expenditures in foreign currency from local budgets, the following applies: based on the approved state budget estimate, the authorized spending limit, and the entity's expenditure request, the State Treasury provides advance allocation or final payment to the budget-funded entity in Vietnamese dong at the bank's announced foreign exchange selling rate at the time of foreign currency expenditure, allowing the entity to directly purchase foreign currency from the bank.

4.7 Expenditures in kind and labor days:

For budgetary expenditures in kind and labor days, the State Treasury records income and expenditure according to the financial authority's "Record of Income and Expenditure Order."

4.8 Regarding allocated funds:

- In cases where the financial authority allocates allocated funds through a budget limit, the State Treasury monitors, controls, and disburses payments to budget-funded entities as stipulated at point II.4.1 above.

- In cases where the financial authority allocates allocated funds through a "Payment Order," the State Treasury pays and disburses according to the financial authority's "Payment Order."

5 Accounting and Reporting of Budgetary Expenditures:

5.1 Accounting:

- Entities using budget funds organize accounting in accordance with the accounting system prescribed by the Ministry of Finance.

- The State Treasury records budget expenditures by fiscal year, budget level, and budget item.

For advance payments, the State Treasury shall record temporary advances for state budget expenditures. When conditions for payment are met, the State Treasury shall convert the temporary advance to a payment issuance.

5.2- Report on state budget expenditures:

- Monthly, quarterly, and annually, units using state budget funds shall prepare reports on state budget expenditures, which must be confirmed by the State Treasury where the funds are issued and paid out, and submitted to the supervising authority at the same level. The supervising authority shall compile these reports and submit them to the financial authority at the same level.

- Monthly, quarterly, and annually, the State Treasury shall prepare reports on state budget expenditures and submit them to the financial authority at the same level and to the higher-level State Treasury. The Central State Treasury shall consolidate these reports and submit them to the Ministry of Finance.

6- Recovery of reduced state budget expenditures:

6.1- During the management, issuance, and settlement of state budget expenditures, the financial authority has the right to decide on the recovery of reduced state budget expenditures for expenditures that violate regulations, are not in accordance with their intended purpose, or exceed national standards. Units using state budget funds shall promptly pay back according to the decision of the financial authority. The State Treasury shall process the recovery of reduced state budget expenditures based on the financial authority's decision and the payment receipt from the units using state budget funds.

6.2- Based on decisions by competent state agencies (Courts, Police, People's Procuratorates) regarding the recovery of expenditures that violate regulations, embezzlement, or loss of state assets, the State Treasury shall process the recovery of reduced state budget expenditures and record them according to the state budget ledger for the expenditures already made.

7- Management of the state budget:

- Based on the annual revenue and expenditure tasks of the state budget (divided by quarter), the financial authority shall establish reserve fund levels for each quarter to ensure payment and disbursement of state budget expenditures during the period and notify the State Treasury to coordinate in management.

- When the reserve fund falls below the established level, the State Treasury shall immediately notify the financial authority to report to the competent authority to take measures:

+ Urging timely collection of state budget revenues to ensure the concentration of revenues according to the plan.

+ Reviewing and adjusting the allocation limits for units using state budget funds for unnecessary expenditures.

+ Temporarily borrowing from the financial reserve fund or other loans to ensure payments. Once sufficient revenues are collected, repayment must be made according to the prescribed regulations.

In special cases, if all the above measures still fail to ensure payment, the financial authority must temporarily suspend state budget expenditures. The State Treasury has the right to refuse to execute payment orders and notify the financial authority's allocation limit if the state budget reserve does not guarantee payment.

III- IMPLEMENTATION

1- This Circular takes effect from January 1, 1998, and replaces Circular No. 20 TC/KBNN dated April 25, 1997, of the Ministry of Finance.

2- Ministries, ministerial-level agencies, government agencies, people's committees at all levels, units using state budget funds, financial authorities, and the State Treasury are responsible for implementing this Circular./.

 

MODEL NO. 01/TT

Unit using state budget...

PAYMENT VOUCHER

Respected State Treasury...

Total amount in words:...

Note:

This model is prepared by the unit using state budget in two copies:

- One copy sent to the State Treasury where the account is opened

- One copy retained by the unit using state budget

MODEL NO. 02/TT

NOTICE

REFUSAL OF PAYMENT ISSUANCE

Respectfully submitted to:...

The State Treasury...refuses to issue payment for the unit...for the expenditure...on...day...month...year...

Amount in figures:…

In words:…

Reason for refusal of payment issuance…

Therefore, the State Treasury...requests to inform...to take appropriate action.

Director of State Treasury
(Signature, stamp)

Place of Receipt:
- Unit using state budget
- Financial authority
- Higher-level State Treasury
- Retain State Treasury

MODEL NO. 03/TT

Unit using state budget...

REQUEST FOR PAYMENT

Respected State Treasury...

Based on the approved annual expenditure budget of the unit...dated...day...month...year 199...

Based on the remaining balance of the allocation limit up to...day...month...year...

Based on the approved advance payment by the State Treasury dated...day...month...year...

Request the State Treasury to settle the advance payment amount:

In figures:…

In words:…

(According to the following expenditure items):

 

Section Approved for Payment by State Treasury:

- In Figures:

- In Words: