Joint Circular No. 48/2002/TTLT-BTC-BNNPTNT guiding financial management regulations for agricultural cooperatives

JOINT CIRCULAR

Guidelines for Financial Management of Agricultural Cooperatives

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Pursuant to the Law on Cooperatives issued on March 20, 1996, which took effect from January 1, 1997; to ensure that financial management activities of agricultural cooperatives are conducted systematically, the Ministry of Finance and the Ministry of Agriculture and Rural Development issue guidelines for financial management of agricultural cooperatives as follows:

A. GENERAL PROVISIONS

1- These guidelines apply to agricultural cooperatives, agricultural cooperatives engaged in diversified business operations, salt production cooperatives, and other cooperatives providing services such as intensive land cultivation, seedling production, pest control, and fertilizers for agriculture (hereinafter referred to as cooperatives).

2- Based on their specific characteristics and operational conditions, cooperatives shall establish cooperative charters in accordance with these guidelines, to be approved at member assemblies, serving as the basis for implementation, ensuring transparency, democracy, and compliance with the law.

B. SPECIFIC PROVISIONS

I. SOURCES OF FUNDS FOR PRODUCTION AND BUSINESS OPERATIONS

The sources of funds that cooperatives use for production and business operations include:

1. Capital of owners.

1.1- Capital contributions of members:

Members joining a cooperative must contribute charter capital according to the resolution of the member assembly recorded in the charter to complete registration procedures for business operations.

Members may contribute capital in cash. If contributing assets or labor, they must be converted into cash based on local market prices, as determined by the member assembly.

Members may contribute capital in one lump sum or in installments, but the initial contribution must be at least 50% of the stipulated amount, with the remainder contributed within a period not exceeding twelve months.

The capital contributions of members shall be adjusted according to the decision of the member assembly as follows:

+ Increase in capital contributions: when the cooperative raises additional capital contributions from members to increase its charter capital; or when new members are admitted.

+ Decrease in capital contributions: when the cooperative returns capital contributions to members; or when the member assembly decides to allocate capital contributions to cover losses in production and business operations for the year.

The cooperative must maintain accounting records promptly documenting the capital contributions of each member.

1.2- Capital transferred from old cooperatives or from village authorities:

When an old cooperative transitions its operations under the Law on Cooperatives, the value of assets directly serving common production and business operations and remaining funds and reserves of the old cooperative shall be handled as follows:

- For remaining funds and reserves, they shall be evenly distributed as capital contributions of each member.

- For assets serving production and business operations such as irrigation works, electrical facilities, warehouses, drying yards, docks, etc.

+ In cases where the majority of members (over 50%) of the old cooperative join the new cooperative, these assets shall become the shared capital of the new cooperative, without being allocated individually to members.

+ In cases where the new cooperative is established with less than 50% of the members of the old cooperative participating but using and exploiting these assets, the People's Committee of the commune or ward shall decide on the handling of these assets. If the new cooperative receives or leases these assets, it shall account for them according to current regulations regarding the receipt or leasing of assets for production and business needs. The lease payments for the year shall be accounted for as production and business expenses of the cooperative.

1.3- Cooperative reserves: Cooperative reserves are collective ownership funds that have not yet been utilized.

Cooperatives shall establish reserves from post-tax profits: development production and business reserve, financial contingency reserves, and other reserves as decided by the member assembly. The level of allocation and usage of these reserves must be decided by the member assembly as follows:

- Development production and business reserve: used for expanding production and business activities, updating technology, promoting agriculture, and training cooperative staff.

- Financial contingency reserve: used to offset losses caused by natural disasters or fires, as decided by the member assembly.

- Other reserves (if any): used for social welfare expenditures and rewards for collectives and individuals who achieve outstanding results in business operations and product sales of the cooperative.

1.4- Subsidized capital (state grants, gifts from organizations and individuals).

2- Borrowed capital and occupied capital.

2.1- Borrowed capital:

- Loans from banks and credit institutions.

- Loans from members and other organizations and individuals as agreed.

Loan contracts with amounts equal to or greater than 50% of the cooperative's charter capital must be approved by the member assembly; those below 50% of the charter capital shall be decided by the cooperative's management board.

2.2- Occupied capital, including: unpaid debts, income not yet distributed... The cooperative has the responsibility to repay these debts on time upon maturity.

3- Other sources of capital include: share capital (if any), joint venture capital, associated capital, etc.

II. MANAGEMENT OF ASSETS AND CAPITAL IN CASH FORM

Assets in agricultural cooperatives include: architectural structures, houses, workshops, machinery, equipment, materials, raw materials, fuel, finished products, semi-finished products, and various forms of capital in cash (cash on hand, bank deposits), etc.

Assets in cooperatives are divided into two categories: fixed assets and current assets.

1- Fixed assets.

1.1- Fixed assets in cooperatives: include tangible fixed assets and intangible fixed assets.

- Tangible fixed assets are material means of labor with independent physical form (each unit of asset has an independent structure or is a system consisting of multiple parts of assets linked together to perform one or several specific functions) with a value of five million dong or more and a service life of over one year, participating in multiple business cycles, but maintaining their original physical form such as: houses, buildings, machines, equipment, fruit trees, and long-term industrial crops...

Material means of labor with a value less than five million dong but are primary participants in multiple business cycles of the cooperative shall be classified as fixed assets:

+ Breeding sows, breeding boars.

+ Office desks, chairs, cabinets, televisions, computers.

+ Transport vehicles, boats.

For short-term industrial crops planted annually with harvests every 2-3 years such as sugarcane, bananas, pineapples, mulberry trees, although their value exceeds VND 5 million, they are not recorded as fixed assets. The costs for planting and maintaining these crop gardens are allocated to production expenses according to the harvesting period of the garden.

Intangible fixed assets are those without specific physical form but with significant investment value and participation in multiple production cycles, such as cooperative establishment costs, purchase costs for invention patents, technology transfer costs, etc.

1.2- Management and utilization of fixed assets:

The management, utilization, and depreciation of fixed assets in cooperatives shall be carried out in accordance with Decision No. 166/1999/QĐ-BTC dated December 30, 1999, issued by the Ministry of Finance, and the detailed guidance below:

Cooperatives must establish regulations on the management and utilization of fixed assets at each stage and production unit, and throughout the entire cooperative; maintain books to track the original cost, depreciation, and timely reflect all changes in quantity, quality, and remaining value of each fixed asset.

All fixed assets invested, constructed, purchased, and utilized by the cooperative for production and business operations must be depreciated and included in product and service costs to recover capital. Depreciation of fixed assets is calculated using the following formula:

The useful life of fixed assets is based on the technical design lifespan, current condition, and economic lifespan of the assets. In cases where it is not specified in the technical design, the decision is made by the cooperative management board.

The following fixed assets shall not be subject to basic depreciation:

+ Fixed assets invested using state budget funds, contributions from members' labor and capital (not invested using cooperative capital) serving the common good of society, not specifically for the cooperative's production and business activities, such as dikes, embankments, bridges, culverts, irrigation canals, roads...

+ Fixed assets that have been fully depreciated (capital fully recovered) but continue to be used.

+ Unused fixed assets awaiting liquidation.

+ Fixed assets serving cooperative welfare facilities such as kindergartens, traditional houses, etc.

+ Leased fixed assets.

Cooperatives implement regular maintenance and major repair systems for each type of fixed asset:

+ The assessment of the technical condition of fixed assets, preparation of budgets, and recommendations for decisions by the management board are conducted by the user department.

+ Regular maintenance and preservation costs are directly included in the production and business operation costs of the current fiscal year.

+ Major repair costs are accounted for as follows:

* Fully included in the production and business operation costs of the object using the fixed asset in the year if the cost is small.

* Included in pending costs to be gradually allocated over several years if the cost is large.

Cooperatives may invest in upgrading fixed assets, proactively liquidate and sell unused fixed assets to maximize efficiency in production and business operations.

For the construction and purchase of large-value fixed assets (specific amounts must be recorded in the cooperative charter), the management board must develop plans approved by the member assembly; smaller amounts are decided by the management board and reported to the member assembly in the same year.

For fixed assets purchased or constructed using borrowed funds, cooperatives must repay debts on time according to agreements using the depreciation fund of fixed assets (including depreciation of fixed assets invested using cooperative equity capital) and the development investment fund of the cooperative.

Liquidation and sale of fixed assets are carried out through the asset disposal council of the cooperative. The council includes representatives from the management board, supervisory board, and chief accountant.

In cases of increased or decreased fixed assets due to purchases, constructions, transfers, losses, etc., complete handover and liquidation records must be established. The acceptance and liquidation team consists of representatives from the management board, chief accountant, supervisory board, and the other party signing off on the record, clearly defining responsibilities and measures for dealing with wasteful, corrupt, or negligent actions causing damage, loss, or destruction of cooperative fixed assets.

Those responsible for managing and utilizing fixed assets must have professional knowledge and skills in usage and preservation; they are responsible for protecting and ensuring the long-term usability and high efficiency of fixed assets.

At the end of the year, cooperatives must conduct an inventory of fixed assets. If excess or missing assets are discovered, the causes must be identified. Excess assets should be recorded as increased capital, while missing assets require determination of responsibility for compensation, with any remaining shortfall recorded as reduced capital.

2- Current assets.

Current assets in cooperatives include: inventory and monetary capital.

2.1- Inventory, including: various types of materials, fuel, tools, products, goods, semi-finished products, unfinished products...

Cooperatives must organize warehouse systems to effectively manage, store, and utilize assets.

The warehouse manager is responsible to the cooperative management board for the storage of all current assets in the cooperative's warehouses and yards.

All entries and exits from the warehouse must be documented with full supporting documents and recorded in relevant ledgers (warehouse entry and exit forms, warehouse ledgers, material and product ledgers...).

The recorded value of assets entering the warehouse is the purchase price plus transportation, storage costs, and related expenses up to the warehouse.

Cooperatives establish loss rates for each type of current asset for each industry and production cycle, appropriate to the cooperative's conditions, and assign management responsibilities to the warehouse manager. Losses exceeding the set limits without justifiable reasons require clear accountability and compensation from the manager.

The total value of all current assets used must be included in the costs of the users during the production and business operation period of the cooperative.

In cases where tools and equipment with large quantities are used for more than one year, they shall be included in the production and business costs of the user entity over two years.

- Cooperatives must periodically organize an inventory of current assets. If excess or missing assets are discovered, the cause must be clearly identified. Excess assets should be recorded as an increase in capital, while missing assets require determination of responsibility for compensation. The difference in value after compensation shall be recorded as a decrease in capital.

- At the end-of-year inventory, if raw materials, tools, supplies, finished goods, and inventory items have market prices lower than their book values on accounting records, the cooperative may establish a reserve for inventory write-downs. The amount of the write-down reserve is the difference between the reduced value of inventory recorded in the books and its market value as of December 31. This write-down reserve can be recorded as a business expense before preparing the annual financial report. The establishment and use of this reserve shall be carried out according to Circular No. 107/2001/TT-BTC dated December 31, 2001 issued by the Ministry of Finance titled "Guidelines for Establishing and Using Reserves for Inventory Write-Downs, Securities Investment Write-Downs, and Bad Debt Provisions at Enterprises."

2.2- Cash Capital: This is a portion of current assets in monetary form, including:

- Cash on hand (including bank drafts and foreign currency).

- Bank deposit balances (including both Vietnamese dong and foreign currency).

- Valuable metals, precious stones, and negotiable securities.

Cooperatives must establish unified management regulations and maintain detailed accounting records for cash receipts and payments, bank deposits, bank drafts, and foreign currencies.

The cashier must regularly update cash transactions and strictly adhere to cash management regulations.

Periodically (monthly), a cash inventory must be organized and the bank account balances must be reconciled with the cooperative's records.

III. MANAGEMENT OF REVENUE

1- Revenue of cooperatives includes:

1.1- Revenue from production and business activities: This is the total value of products and services sold or provided by the cooperative to member households and customers, which are paid for or accepted for payment (even if not yet received).

Revenue is calculated in monetary terms. In cases where revenue is received in kind (barter), it must be converted to monetary value for accounting purposes.

1.2- Revenue from other activities: This includes government price support payments (agricultural incentives, electricity subsidies, etc.), rental income, proceeds from the liquidation or sale of fixed assets, interest from loans, interest on deposits, joint venture profits, and other irregular income.

All revenue generated during the period must be supported by invoices and other documentation and must be promptly reflected in the cooperative's accounting records according to Decision No. 1017 TC/CĐKT dated December 12, 1997 issued by the Ministry of Finance regarding accounting regulations for agricultural cooperatives.

2. Items that cannot be recorded as revenue include:

- Recovered debts, advance payments, capital contributions from members, or joint investment funds from other organizations and individuals.

- Government investment support:

+ Transportation and water conservancy support from the government: Recorded as an increase in capital.

+ Transport subsidy to cover costs in mountainous and border regions: Recorded as a reduction in fees.

- Money or property donated to the cooperative by organizations or individuals: Recorded as an increase in capital.

- In cases where the cooperative has issued sales invoices and received payment but has not yet delivered the goods, the value of these goods shall not be recorded as revenue but rather as prepaid customer payments.

3. Several important points regarding the management and accounting of revenue:

- For consignment goods received from other entities, revenue is the commission earned from the consignment sales.

- For processing services, revenue is calculated based on the processing fee recorded on the invoice for completed processed products accepted for payment by the client.

- For products, goods, and services produced by the cooperative for gifts or internal consumption, revenue is calculated based on the production cost (cost of goods sold) of those products, goods, and services.

- For long-term lease activities where rent is collected in advance, the cooperative shall record the advance rent as a liability. Annual revenue from leasing is calculated by dividing the total rent collected by the number of years covered by the lease.

- For contractual service activities within the cooperative, revenue is the amount due under the contract.

- For credit activities, revenue is the interest receivable on overdue loans within the period.

- Cooperatives with revenue in foreign currency must convert it to Vietnamese dong using the exchange rate published by the State Bank of Vietnam at the time the revenue was generated.

IV. MANAGEMENT OF PRODUCTION COSTS AND PRODUCT SERVICE COSTS

1. Production and business activity costs in cooperatives.

Production and business activity costs in cooperatives include direct costs for each production and business activity and indirect costs.

Cooperatives must record and reflect all actual costs incurred for each service and production activity. Management and accounting of costs shall be conducted as follows:

1.1- Direct Costs:

- Material costs include: raw material costs, fuel, tools, etc. The management of material costs is carried out through two stages: material consumption rates and material prices.

+ Material consumption rates: All materials used in production and business activities must be strictly managed according to the cooperative's specified consumption rates for each type of material per product.

+ Material prices: Used for accounting and determining material costs, this includes:

External material prices: purchase price recorded on the seller's invoice plus transportation, handling, storage, and reasonable losses during transit, and warehouse rental fees.

Self-manufactured material prices: actual raw material costs plus actual costs incurred during the manufacturing process.

The prices of various types of raw materials and processing costs, transportation, storage, procurement expenses... mentioned above must be recorded on invoices and documents according to the prescribed regulations. In cases where raw materials are purchased from direct producers without invoices, the buyer must prepare a detailed list, clearly stating the name, address of the seller, quantity of goods, unit price, total amount, signature of the seller, and approval by the cooperative management.

- Depreciation costs of fixed assets (as stipulated in point 1, Section II of this Circular).

- Labor costs: including wages paid to cooperative members and hired labor directly involved in the cooperative's production and business activities, consistent with market prices at the time of hiring (if paid in kind, it shall be converted into monetary value).

Management allowances for team and group managers of each service and industry are calculated according to the provisions at point 4.b of this section - regulations regarding cooperative management allowances.

- External service costs: these include repair costs of fixed assets, electricity and water charges paid to branches and irrigation enterprises; freight and handling fees; other external services, and only those expenses that have legal and reasonable documentation will be accounted for.

+ Marketing promotion and cooperation expenses are recorded as follows: income from market information, customers, and export products, economic and trade consultancy fees, export market search activities, organizing exhibition booths abroad. Investment expenses for establishing representative offices and warehouses abroad are recorded as increases in fixed assets.

+ Export brokerage fees or commissions: if the cooperative exports directly or through agency, such expenses can be recorded as production costs.

The cooperative management board establishes rules and expenditure standards and must publicly announce them as a basis for management, operation, and supervision. The manager decides on the expenditure levels and is responsible before the member assembly for their decisions.

1.2- Indirect costs (cooperative management costs) include:

- Office supplies costs.

- Depreciation costs of office fixed assets.

- Wages for cooperative management staff: the payment of wages to cooperative management staff is based on the results of the cooperative's production and business activities and services in the year, determined by two methods: 1%-5% of revenue or 20-25% of net income (revenue minus direct costs). The choice of calculation method and specific wage ratio is decided by the member assembly depending on the specific conditions of the cooperative.

+ Calculation of wages according to the guidelines in the following tables:

TABLE 1: Calculating the wage fund for cooperative management staff based on revenue

Example: The cooperative's revenue in 1999 was 2,500 million dong, the wage fund calculated based on revenue is as follows:

(260 million x 5%) + (1,740 million x 3%) + (500 million x 2%) = 75.2 million dong.

TABLE 2: Calculating the wage fund for cooperative management staff based on net income

+ Based on the wage fund for cooperative management staff mentioned above, the cooperative uses the manager's wage as a coefficient of 1 to calculate wages for each position of cooperative management staff, according to table number 3.

TABLE 3: Wage standard for cooperative management staff by position

- Repair costs of office assets

- External service costs: lighting electricity, telephone...

- Other monetary expenses such as interest payments on loans from organizations and individuals, sales expenses, business license tax, real estate tax, VAT payable to the State.

Particularly, hospitality, ceremonial, and transaction costs serving the production and business operations of the cooperative must have clear objectives, effectiveness, thriftiness, and not exceed the control limits specified in Circular No. 18/2002/TT-BTC dated February 20, 2002, of the Ministry of Finance.

- Travel expenses for cooperative staff and members: Depending on the specific conditions of the cooperative, Circular No. 94/1998/TT-BTC dated June 30, 1998, of the Ministry of Finance is applied to establish travel expense regulations for staff and members dispatched by the cooperative management board but not exceeding the prescribed limit.

At the end of the year, cooperative management costs are summarized and allocated to calculate the cost of each product and service of the cooperative according to the revenue or cost criteria of each activity.

- Provision for reduction in inventory value established according to point 2.1, Section II of this Circular, provision for doubtful debts established according to point 2.2, Section V of this Circular.

- Other expenses such as asset disposal costs, debt collection costs...

Cooperative expenses are included in the determination of corporate income tax according to the provisions in Circular No. 18/2002/TT-BTC dated February 20, 2002, of the Ministry of Finance.

The following items shall not be included in business service operating costs:

- Penalties for breach of contract, violation of laws such as the Labor Law, Tax Law, Environmental Protection Law, Traffic Law, failure to report statistics, financial accounting systems, and other laws. If the penalty is due to the cooperative's violation, it shall be deducted from the post-tax profit of the cooperative; if the violation is committed by a group or individual, the group or individual must pay the fine.

- Construction investment costs, purchase of fixed assets. Interest payments on construction investment loans during the period when the project has not been completed and put into use shall be recorded as construction investment costs.

- Advance payment expenses, repayment expenses, and other loan payments.

- Expenses belonging to the content of cooperative funds.

2. Cost of products and services consumed during the period (or cost of goods sold and services provided during the period)

The cost of products and services includes: direct costs; indirect costs (management expenses) determined as follows:

- The cost of products and services consumed during the period is calculated according to the weighted average method of production costs of products during the period and opening inventory costs at the beginning of the period; or it can be determined by adding the opening work-in-progress costs, adding the direct production costs incurred during the period, and subtracting the closing work-in-progress costs.

- Cooperative management expenses incurred are fully allocated to the cost of products during the period. In cases where the production cycle of products is long or has special characteristics, cooperative management expenses shall be allocated in accordance with specific circumstances to ensure compatibility with the volume of products consumed during the period, opening inventory, and closing work-in-progress.

Depending on the production and business conditions of the cooperative, the object and appropriate method for calculating the cost of products and services should be determined.

V. MANAGEMENT OF DEBTS AND PAYMENTS

1. Debts payable.

a- Debts payable arising from borrowing or occurring during the purchase and sale of materials, products, and goods must be classified according to the debtor and nature of the debt, including: payable to banks, financial organizations, payable to suppliers, payable to the State, payable to cooperative members, and other payables; short-term debts, long-term debts.

b- The cooperative must maintain detailed records to track each creditor, the content of each loan, the loan term, and each payment made.

Accounting must monitor loan repayments, implement checks and supervision to ensure that borrowed funds are used for their intended purposes and that loans are repaid on time without generating overdue debts.

2. Receivables.

2.1- Receivables within the cooperative include:

- Receivable from customers: these are agricultural products sold by the cooperative to enterprises, social organizations, and individuals outside the cooperative who have not yet paid or have not fully paid for the products.

- Receivable from cooperative members and farmers: these are service fees such as irrigation, plant protection, veterinary, scientific and technical services, advance material supplies... that cooperative members and farmers have not yet paid or have not fully paid to the cooperative.

- Other receivables: these are receivables from individuals and units inside and outside the cooperative regarding compensation for material losses, temporary loans...

2.2- The cooperative must maintain detailed records to track each debtor, the content of each receivable, and each payment made. For receivables in kind, the cooperative must monitor to recover the physical assets to preserve capital when prices fluctuate.

- For receivables from regular customers, periodic reconciliation of receivables, payments received, remaining amounts, and confirmation of debts with the cooperative in writing must be conducted.

- For receivables from cooperative members, the cooperative must maintain separate settlement accounts for each member to unify management and tracking of receivables and payments made.

The cooperative needs to record in detail each transaction for payment to each debtor; if team leaders borrow on behalf of others, the debtors cannot be cooperative members recorded through teams or groups.

- Difficult-to-collect receivables are debts overdue for two years or more, which the cooperative has repeatedly reconciled and pursued but still failed to recover; or debts overdue less than two years but the debtor unit is currently under consideration for dissolution, bankruptcy, the debtor has fled, or is being prosecuted, detained, or tried by legal authorities.

- For such debts, the cooperative must actively urge repayment and apply measures to recover debts such as reporting debts, sending requests to the court for resolution.

When preparing annual financial statements, the cooperative may establish provisions for difficult-to-collect receivables and record them as cooperative management expenses for the year. The level of provision established depends on the potential loss for each receivable, but the total maximum level of provision shall not exceed 20% of the total amount of receivables of the cooperative as of December 31.

The establishment and use of provisions for difficult-to-collect receivables shall be carried out in accordance with Circular No. 107/2001/TT-BTC dated December 31, 2001 of the Ministry of Finance "Guidelines for the establishment and use of provisions for inventory write-downs, investment securities write-downs, and difficult-to-collect receivables at enterprises."

- Unrecoverable receivables are debts owed by the cooperative to debtors, but the debtor is an organization that has been dissolved, bankrupt, ceased operations, and is unable to pay; the debtor is an individual who has died, disappeared, is serving a prison sentence, or is being prosecuted, detained, or tried by legal authorities, but there is sufficient evidence proving that the debt cannot be recovered; debts overdue for more than three years, the cooperative has applied all measures but still cannot recover the debt...

Annually, the cooperative establishes a committee to handle assets and debts to consider and process the cancellation of such debts. Losses from the cancellation of debts are recorded as deductions from provisions for difficult-to-collect receivables; if insufficient, they are recorded as production and business expenses for the year. If recorded as business expenses results in a loss for the cooperative, the board of directors of the cooperative reports to the general assembly of cooperative members to reduce capital.

3. Management and tracking of advances and advance payments.

An advance is a sum of money that the cooperative provides in advance to staff and cooperative members to carry out tasks approved by the cooperative director.

Contents of advances in the cooperative include: advances for purchasing materials, tools, production supplies, fixed assets; advances for wages, travel expenses... The tracking and accounting of advances are carried out according to the following regulations:

- The person receiving the advance must be a staff member or cooperative member.

- The advance request form must clearly state the name, address (unit, department), amount requested, reason for the advance, purpose of using the advance, repayment date, and must be signed off by the cooperative director. The accountant prepares a payment voucher attached to the advance request form and transfers it to the cashier for disbursement.

- Advance payments shall be settled immediately upon completion of the work. If payment is delayed beyond the date specified on the advance payment receipt, the person receiving the advance payment and the accountant overseeing the advance payment shall bear responsibility for late payment penalties according to the financial accounting management regulations of the cooperative.

- The recipient of the advance payment must use the funds strictly for the purposes stated on the advance payment receipt, settle the amount within the prescribed time frame, and provide all original supporting documents. A person who has not yet settled the previous advance payment shall not be eligible for a second advance payment.

- The cooperative shall maintain detailed records of each advance payment made to individual recipients, tracking both the advances and their subsequent settlements.

4. Monitoring, managing, and settling state taxes.

The cooperative shall proactively declare, calculate, and determine the tax payable according to current tax laws, keeping detailed records of the amounts due, paid, and still owing for each tax category, following the financial reporting model for agricultural cooperatives, and shall not delay tax payments.

5. Monitoring, managing, and settling accounts with members and employees.

Settling accounts with members and employees of the cooperative includes wages, interest, and other amounts that the cooperative is required to pay.

The cooperative must maintain detailed records tracking each individual member or employee and each amount owed. For payments made in kind, detailed records must be kept showing quantities, unit prices, and total amounts payable; simultaneously, the cooperative must maintain settlement records for each household member to ensure financial transparency with households and implement democratic regulations for members, without processing payments through teams or groups.

VI. DISTRIBUTION OF COOPERATIVE PROFITS

Profits from the cooperative's business operations in a year, including all profits during the period, shall be distributed as follows:

- Covering losses incurred in previous years as stipulated by tax laws.

- Paying corporate income tax according to current national tax laws.

- Deducting amounts for breach of contract and violations of law for which the cooperative is responsible.

- Paying dividends to investors who have contributed capital to the cooperative.

- The remaining profit shall be distributed as follows:

+ Establishing reserves as provided in Part B, Section I of this Circular.

+ Distributing profits to members based on their capital contributions.

VII. FINANCIAL REPORTING

At the end of each accounting period (end of crop season or year-end), the cooperative's accountant must close the books, conduct an asset inventory, reconcile account balances with the bank, reconcile receivables and payables, and prepare financial reports for internal management and oversight, as well as for government supervision of the cooperative.

The cooperative is responsible for preparing financial reports in accordance with Decision No. 1017-TC/QĐ/CĐKT dated December 12, 1997, issued by the Minister of Finance regarding accounting systems applicable to cooperatives, and submitting them to the Department of Agriculture and Rural Development, the registration authority, the county finance office (district), and the tax collection office (district).

The county finance office (district) and the Department of Agriculture and Rural Development (district) are responsible for compiling and submitting reports to the Provincial Department of Finance and Prices, and the Provincial Department of Agriculture and Rural Development. These departments are responsible for compiling and analyzing financial and business conditions, capital usage, etc., of the cooperative, and providing comments and recommendations to the Ministry of Finance (Enterprise Financial Bureau) and the Ministry of Agriculture and Rural Development (Rural Policy Department).

VIII. FINANCIAL TRANSPARENCY AND FINANCIAL AUDITS IN THE COOPERATIVE

1. Financial Transparency.

Regularly (every six months and annually), the cooperative manager is responsible for publicly reporting financial statements to members and before the General Assembly of Members.

The main contents of the public financial report include:

- Total revenue: specific sources of income - Form 03-HTX/NN (Decision No. 1017 TC/CDKT)

- Total expenditure: specific expenditure items - Form 03-HTX/NN (Decision No. 1017 TC/CDKT)

Detailed revenue and expenditure by industry, service, and product; results of profitability and losses from these activities.

- Results of profit distribution according to the cooperative's charter and resolutions of the General Assembly of Members - Form 06 HTX/NN (Decision No. 1017 TC/CĐKT) and handling of losses (if any).

- Accounts receivable and payable within the cooperative: old debts, newly generated debts, overdue debts, debts due, and difficult-to-collect debts.

- Quantity and value of products and materials in stock; cash balance; unsold products and unused assets, proposing solutions for effective use of capital.

2. Financial Auditing.

- The cooperative's chief accountant is responsible for regularly auditing internal accounting operations.

- The audit committee of the cooperative is responsible for monitoring and auditing financial and accounting activities according to the cooperative's charter. They check and control management and use of materials, assets, capital, and reserves; manage income and expenditures and income distribution within the cooperative; and verify compliance with financial plans and policies.

- Government agencies responsible for financial management of agricultural cooperatives have the duty to inspect compliance with financial and accounting regulations of the cooperative.

IX. IMPLEMENTATION ORGANIZATION

1- The Ministry of Finance (Enterprise Financial Bureau), the Ministry of Agriculture and Rural Development (Rural Policy Department) are responsible for directing provincial Departments of Finance and Prices, and Departments of Agriculture and Rural Development to implement this Circular to cooperatives; regularly guiding and inspecting the implementation of financial management systems for cooperatives and enforcing reward and penalty systems as currently prescribed.

2- The management board of agricultural cooperatives is responsible for implementing the provisions set out in this Circular.

3- This Circular shall take effect fifteen days after its issuance. Previous regulations inconsistent with those in this Circular are hereby repealed.

During implementation, if there are any difficulties, relevant sectors, provincial People's Committees, and cooperatives should promptly reflect them to the Ministry of Finance and the Ministry of Agriculture and Rural Development for supplementary guidance to ensure compatibility.