Circular No. 475-TC/CĐKT regarding the implementation of the Accounting and Statistics Ordinance; the Charter of State Accounting Organization and the Chief Accountant Charter

CIRCULAR

OF THE MINISTRY OF FINANCE NO. 05-TC/CN ON JANUARY 9, 1991 GUIDING THE IMPLEMENTATION OF DIRECTIVE NO. 408-CT ON NOVEMBER 20, 1990 OF THE CHAIRMAN OF THE STATE COUNCIL ON IMPROVING FINANCIAL ACCOUNTING AND ECONOMIC RECORDING WORK IN STATE ENTERPRISES

The Chairman of the State Council issued Directive No. 408-CT on November 20, 1990 regarding improving financial accounting and economic recording work in state enterprises, emphasizing several urgent measures that need to be taken immediately to address weaknesses in financial management and accounting, promote production development, ensure effective business operations, and safeguard capital.

The Ministry of Finance provides detailed guidance on implementing these measures as follows:

1. Each General Corporation, Company, and state enterprise must develop plans to reorganize production at the enterprise level based on utilizing existing equipment capacity; modernizing production lines, changing product lines, and enhancing product quality to meet market preferences and demands; pricing strategies for products; capital mobilization capabilities; organizing joint ventures and collaborations for material supply, production processing, or product sales, researching and applying scientific and technological advancements, etc.; organizing labor restructuring to increase labor productivity and ensure effective business operations while fulfilling tax obligations to the State Budget.

Enterprises with prolonged losses and insignificant roles in the national economy, which are not eligible for government subsidies according to state policy, should be dissolved if they cannot be improved, following the provisions of Decision No. 315-HĐBT dated September 1, 1990 of the State Council and Circular No. 54-TC/CN dated November 13, 1990 of the Ministry of Finance guiding the implementation of the aforementioned decision.

2. Improving financial accounting work in companies and enterprises:

a. Implement capital allocation to entities according to Decision No. 316-CT/HĐBT dated September 1, 1990 of the Chairman of the State Council and Circulars guiding Nos. 41-TC/VKH dated September 18, 1990 and No. 51-TC/VKH dated October 27, 1990 of the Ministry of Finance.

Enterprises should base their assessment of assets as of midnight January 1, 1990 to determine current capital sources within the enterprise, including state budget allocations, self-supplemented capital, and other occupied capital, particularly accurately identifying state budget capital to create conditions and foundations for calculating the amount of capital usage fees (when established and implemented).

Capital allocation will be piloted in some units first. Simultaneously, efforts should be made to expand the scope quickly to bring capital management and utilization into a regular system, ensuring capital preservation and growth, increasing operational efficiency, and implementing the capital usage fee system in all state-owned economic units.

b. Strictly adhering to depreciation and capital utilization regulations for fixed assets as specified in Circular No. 33-TC/CN dated July 31, 1990 of the Ministry of Finance.

c. Enterprises should independently establish economic and technical standards for raw material consumption, energy, labor, wage rates, consistent with the characteristics and conditions of their production and business activities; however, these standards must ensure savings and not exceed those set by the state or higher-level management bodies if applicable; simultaneously reducing input and output costs of products to maintain profitability and effective production and business operations.

d. Accurately accounting for enterprise management expenses:

- Enterprises should rearrange labor and handle surplus labor according to the spirit of Decision No. 176-HĐBT dated October 9, 1989 of the Chairman of the State Council, reduce indirect costs, and ensure a reasonable ratio between indirect and direct departments based on industry-specific production and business characteristics.

- Enterprises may not use working capital or investment funds for production and business purposes to construct offices, purchase work equipment, or vehicles. Strictly implement electricity and fuel conservation.

- Each Company and enterprise must establish reasonable transaction expense systems, hospitality, conference, gift, and incentive policies for organizations and individuals who have assisted the entity in production and business activities, inviting foreign guests and sending personnel abroad for transactions. These policies must be approved by the superior management body of the Company or enterprise (the principal ministry, provincial or city People's Committee, special administrative region) based on principles of thrift, preventing abuse, bribery in any form, prohibiting the use of public funds for personal expenses, and forbidding the conversion of public property to private use. Year-end bonuses for individuals and units must be signed by the awarding authority and recipient.

All transaction expenses mentioned above must be recorded clearly and honestly according to initial documentation rules and publicly disclosed within the enterprise.

- Enterprises must comply with specific regulations on advance payment and cash expenditure systems: all expenditures in enterprises must go through two stages:

+ There must be a budget for expenditures approved by the competent authority. The person responsible for expenditures must bear responsibility for any unauthorized, wasteful expenditures that create opportunities for corruption, bribery, and graft.

+ Expenditures must be settled based on valid and legal invoices and supporting documents.

The Chief Accountant of the enterprise must strictly adhere to the Charter of the Chief Accountant already promulgated and fulfill their role and function in supervising the aforementioned expenditures.

- Each corporation and enterprise must establish reasonable advertising and sample goods expense systems based on practical effectiveness without unnecessary showmanship or waste.

3. Each Company and enterprise must fully fulfill their tax obligations to the State Budget according to current laws and regulations. In cases where units fail to fulfill or delay their obligations to the State Budget, upon request from the competent financial authority, the Bank shall deduct funds from the enterprise account and remit them to the State Budget.

For essential products in the national economy that incur losses due to full cost pricing and state-set selling prices, the Ministry of Finance will provide subsidies based on specific product lists determined by the State Council.

4. Each enterprise must develop plans to practice thrift in production and business operations, construction of technical infrastructure, and income distribution.

The enterprise's plan to practice thrift must include the following basic contents:

Based on analyzing and evaluating weak links and wasteful practices in production and business operations, potential untapped capabilities should be identified to formulate specific measures for thrift, particularly focusing on:

- Reducing consumption of raw materials and supplies. Paying attention to the application of scientific and technological progress and modernizing production lines to lower product costs.

- Reducing enterprise management costs (such as transaction costs, hospitality, awards, etc., as mentioned above), costs during the signing and execution of material and product purchase and sale contracts, exploiting connections to profit from price differences, especially in construction project management: (withdrawing state funds through increased project budget unit prices and contracts between A-B...).

- The plan to practice thrift must be widely discussed among the enterprise's staff, with participation from mass organizations, and encourage the support of all workers.

Within the framework of the bonus fund extracted from the enterprise, including the portion deducted from additional profits due to thrift practices, the enterprise director shall stipulate and implement rewards and penalties for cases of thrift or waste within the enterprise.

5. Each company and enterprise must strictly comply with the Accounting and Statistics Ordinance issued by the State Council pursuant to Decree No. 6-LCT/HĐNN dated May 20, 1980, and the guiding Circular No. 475-TC/CĐKT dated April 24, 1989, of the Ministry of Finance.

Particularly emphasizing strict adherence to the system of initial documentation. Strictly prohibiting the creation of false or untruthful documents.

Record all types of revenue of the establishment: main production revenue, secondary production revenue, sideline business revenue, and other consumption revenues of the enterprise... It is absolutely necessary not to leave any revenue outside the official accounting books.

Correctly and fully recording production costs and product sales revenue also aims to eliminate the situation of fictitious profits and actual losses, or fictitious losses and actual profits.

Financial authorities at all levels (the Ministry of Finance for central companies and enterprises; Provincial Finance Departments for local units) shall conduct periodic accounting inspections: quarterly, semi-annually, or annually (but not less than once a year) for each economic base unit.

The enterprise's chief accountant is directly responsible before legal authorities for implementing the Statistics and Accounting Ordinance at the enterprise.

6. Leaders of ministries and sectors responsible for managing affairs shall be accountable for consolidating financial matters of their ministries at various stages: organizational structure and professional expertise level, sufficient capacity to fulfill advisory functions for ministry leadership in directing financial-accounting work as a crucial tool ensuring effective production and business operations; monitoring, guiding, and inspecting financial and accounting work of subordinate production and business units.

Ministries in charge, People's Committees of provinces, cities, special zones, General Corporations, Companies with state-owned enterprises at both central and local levels need to organize research and widely disseminate, and develop plans to strictly implement Directive No. 408-CT of the Chairman of the Council of Ministers and the implementing Circulars related to this Directive issued by relevant ministries.

This Circular takes effect from the date of issuance.