Joint Circular No. 43-TC/TTLB stipulates the financial management regime for waterworks management and exploitation enterprises.

JOINT CIRCULAR

DECREE NO. 43-CT/TTLB OF DECEMBER 14, 1985 ON THE MANAGEMENT REGIME OF FINANCES FOR STATE ENTERPRISES MANAGING AND EXPLOITING IRRIGATION

I. GENERAL PROVISIONS

1. State enterprises managing and exploiting irrigation (hereinafter referred to as irrigation enterprises) are state-owned technical service enterprises with industrial characteristics tasked with exploiting, storing, and regulating water for agricultural production and other national economic sectors according to approved tasks.

To fully utilize labor potential, technology, and equipment of the system of works, irrigation enterprises may organize production and business activities outside their core functions such as planting trees, raising fish, milling, repairing pumps...

2. Irrigation enterprises are independent economic accounting units, having legal personality, operating on the principle of financial autonomy, being allowed to open accounts at the State Bank, directly signing economic contracts with households using water, supply units of materials, labor services, and other production units, receiving fixed capital and circulating capital from the State, being lent capital by the State Bank, enjoying wage and bonus systems, and setting up enterprise funds according to current regulations. The development incentive fund is temporarily not set aside. If the enterprise has needs for expenditures on technological improvements, expanding production, purchasing fixed assets of small value... will be approved by the competent authority and funded by the provincial irrigation fund or borrowed from the State Bank.

Irrigation enterprises must strictly implement the economic and financial management systems of the State.

II. MANAGEMENT REGIME OF FINANCES

A. PLANNING.

Annually, irrigation enterprises base on assigned tasks, irrigation capacity of the system of works, and approved economic-technical norms, build high-quality production-technical-financial plans that are positively balanced and firmly stable.

The production, technical, and financial plan system includes the following parts:

1. Production and consumption plan (irrigation plan).

2. Scientific and technical plan.

3. Basic construction and major repair plan of fixed assets.

4. Labor and wage plan.

5. Material, equipment, and energy plan.

6. Production cost and average cost per hectare of irrigation plan.

7. Financial and credit plan.

8. Plan for setting up and using the irrigation fund.

B. MANAGEMENT OF FIXED ASSETS AND FIXED CAPITAL.

Fixed assets of irrigation enterprises are constructed and purchased using sources of investment capital from the State Budget, loans from the Bank, own capital of the enterprise, and provincial irrigation funds.

Fixed assets in irrigation enterprises are divided into the following types:

1. Buildings.

2. Construction materials including dams and dikes; bridges and culverts; canals and ditches; etc...

3. Power machinery and equipment.

4. Work machinery and equipment.

5. Transmission equipment.

6. Tools.

7. Working tools, measuring, and testing equipment.

8. Transport equipment and means.

9. Management tools.

10. Other fixed assets.

The organization of fixed asset accounting management is carried out according to the fixed asset accounting regulation number 222-TC/CĐKT dated October 11, 1980, issued by the Ministry of Finance.

Irrigation enterprises must calculate and set aside basic depreciation and major repair depreciation for all fixed assets already put into use. Specifically, for the following fixed assets, only major repair depreciation is set aside without basic depreciation:

- Dams and reservoirs,

- Bridges, culverts, boat docks,

- Canals and ditches,

- Large electric pumps with flow rates of 8000 m3/h or more.

Specific depreciation rates for each type of asset are guided by the Ministry of Water Resources after consultation with the Ministry of Finance. The basic depreciation and major repair depreciation capital must be fully submitted to the provincial irrigation fund immediately after the enterprise collects irrigation fees. For basic depreciation of fixed assets purchased with bank loan capital (if any), it must be repaid to the bank.

C. MANAGEMENT OF CIRCULATING CAPITAL.

Irrigation enterprises are determined the level of circulating capital and are lent by the State Bank like other production and business enterprises (principles, contents, methods of determining the level of circulating capital, and specific review procedures are guided by the Ministry of Water Resources after consultation with the Ministry of Finance and the State Bank of Vietnam).

D. ACCOUNTING FOR PRODUCTION COSTS.

Production costs of irrigation enterprises include costs for main production and business activities and costs for auxiliary production and business activities:

a) Costs for main production and business activities are expenses for completing irrigation tasks, including the following items:

1. Raw materials,

2. Fuel used in production,

3. Energy used in production,

4. Wages and wage supplements of production workers,

5. Expenses for using machinery and equipment, including depreciation of machinery and equipment,

6. Major repair expenses for dams, reservoirs, culverts, canals and ditches,

7. Regular maintenance expenses for dams, reservoirs, culverts, canals and ditches,

8. Expenses paid to head management stations,

9. Management expenses of stations and clusters,

10. Non-production expenses,

11. Other expenses.

Enterprises must base on economic-technical norms to calculate production costs under normal weather conditions and calculate the average cost per hectare irrigated annually and per crop season as a basis for planning and evaluating the implementation of production cost plans (reducing production costs).

Based on the completion of assigned tasks, enterprises must strive to reduce costs to the lowest possible level but must not cut necessary expenses, especially those for regular maintenance of works.

Years with abnormal weather will be specifically considered to accurately assess the implementation of the enterprise's plans.

b) Costs for auxiliary production and business activities are expenses for production and business activities outside the main irrigation tasks, aiming to fully utilize existing favorable conditions regarding labor, work capacity, etc...

E. ORGANIZATION OF ACCOUNTING DEPARTMENT.

- The accounting organization shall be streamlined and consist of accountants who possess sufficient capability and moral integrity.

- Waterworks enterprises shall apply the industrial accounting system.

- Fully establish accounting books in accordance with state regulations.

- Accurately and promptly record all economic activities arising, management and utilization of capital sources, fixed assets, inventory status of materials, labor usage, material and energy consumption, other expenses, water benefits fees, transportation fees, ancillary production and business income, payments to the provincial waterworks fund, allocation and utilization of the contingency fund at the enterprise. The head accountant of the waterworks enterprise is a state controller for the protection of socialist property and the rational use of the enterprise's assets, materials, and funds, responsible for assisting the director in organizing and directing accounting work at the enterprise.

The enterprise director is responsible for creating all necessary conditions for the head accountant to fulfill their duties and regularly inspect the work of the head accountant.

G. MANAGEMENT OF REVENUES.

Revenues of waterworks enterprises include:

a) Main production and business revenues include:

- Water benefits fees: revenues from irrigation services for rice, vegetables, fruits, industrial crops, fruit trees, and aquaculture...

- Transportation fees (for boats, rafts, barges passing through sluices, canals).

b) Ancillary production and business revenues include:

- Revenues from the sale of by-products such as crops, fish farming, rice milling, pump repair...

c) Other revenues are those permitted by local authorities outside the scope defined in Decree No. 112-HĐBT dated August 25, 1984 of the Council of Ministers and Circular No. 47-TT/LB dated November 2, 1984 of the Ministry of Water Resources - Finance, such as industrial water supply, urban drainage...

d) If the enterprise has collected up to the maximum level as prescribed but still cannot ensure reasonable costs approved or due to severe natural disasters causing crop failure, the water benefits fees may be exempted or reduced, and the enterprise will be compensated by the provincial waterworks fund. If the waterworks fund is insufficient, the local budget will provide special assistance.

Water benefits fees are the main source of revenue for waterworks enterprises, which must accurately calculate the amount to be collected from each water user according to Decree No. 112-HĐBT dated August 25, 1984 of the Council of Ministers, Circular No. 47-TT/LB dated November 2, 1984 of the Ministry of Water Resources - Finance, and the regulations of the People's Committee of the province.

Waterworks enterprises must fully report the value and physical quantity of their collected revenues to the People's Committee of the district and promptly complete necessary procedures with relevant agencies such as foodstuffs, finance, and banking departments, while monitoring and urging water users to pay water benefits fees quickly, efficiently, in accordance with policy and prescribed rates, and urging foodstuff agencies to timely settle payments into the enterprise's account.

Waterworks enterprises must strictly manage and utilize revenues in accordance with regulations, including compensation from the provincial waterworks fund and special subsidies from the local budget (if applicable).

H. DISTRIBUTION OF PROFITS AND ESTABLISHMENT OF FUNDS.

Profits of waterworks enterprises include profits from main production and business activities and profits from ancillary production and business activities.

a) Profits from main production and business activities are set at 18% of the approved wage fund of production and business workers. Waterworks enterprises must prepare profit plans and distribute profits along with annual production-technical-financial plans as a basis for evaluating financial results and establishing enterprise funds.

Enterprises operating in areas with poor soil productivity, complex irrigation works, harsh weather conditions... where total approved costs exceed total revenues (carefully calculated), achieving the approved difference is considered completion of profit plan. If the actual difference is lower than the approved difference, the shortfall is considered excess profit.

b) Ancillary production profits are the difference between actual revenues from product sales and labor costs of ancillary production activities.

The profit level determined above (a + b) serves as the basis for reviewing and establishing enterprise funds.

c) Profits in waterworks enterprises are distributed as follows:

- Planned profits are used for establishing enterprise funds (two reward and welfare funds).

- Excess profits are distributed 50% to supplement the two enterprise funds, 50% transferred to the contingency fund.

Ancillary production profits are distributed according to current regulations for industrial enterprises.

d) Enterprises with approved costs exceeding revenues that complete plan targets are also entitled to establish funds like other waterworks enterprises (including the contingency fund).

The amount expected to be allocated, the enterprise must prepare a budget together with the production cost plan for approval by the supervising agency and the finance department at the beginning of the year and after each harvest, temporary allocation of 70% along with the difference in costs exceeding revenues from the provincial waterworks fund or budget allocation (if applicable). After the final settlement of the year, the enterprise will be granted supplementary allocation of the full amount. If overdrawn, it will be deducted from the allocation of the following year.

Principles, contents, and methods of reviewing plan completion and establishing enterprise funds will be guided by the Ministry of Water Resources after consultation and agreement with the Ministry of Finance and related agencies.

e) Waterworks enterprises may establish a contingency fund. In years with favorable weather or due to the enterprise's efforts to increase revenue and reasonably reduce costs, if there is excess profit, the enterprise may allocate 50% of the excess profit into a separate bank account for contingency purposes in case of increased costs in disaster years.

For years with major natural disasters (as guided by the Ministry of Water Resources for evaluation), the enterprise requests the competent authority to review and approve; after approval, the enterprise is permitted to withdraw funds from the reserve fund to cover increased expenses. If the reserve fund is insufficient to guarantee coverage, the enterprise may be granted or temporarily allocated funds from the provincial water management fund or from the local budget.

III. IMPLEMENTATION PROVISIONS

This Circular takes effect from the date of issuance and uniformly applies to all enterprises managing and operating water resources throughout the country, replacing the provisions set out in Decision No. 16-QĐLB dated October 21, 1972 of the Ministry of Water Resources - Finance and accompanying guiding documents. The People's Committees of provinces, cities, and centrally governed municipalities are responsible for organizing and directing implementation. During the implementation process, if there are issues requiring amendments or supplements, localities must promptly report to the Ministry of Finance and the Ministry of Water Resources for study and revision.