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

CIRCULAR

JOINT CIRCULAR OF THE MINISTRY OF FINANCE AND THE MINISTRY OF AGRICULTURE AND RURAL DEVELOPMENT NO. 48/2002/TTLT-BTC-BNNPTNT DATED MAY 28, 2002 ON GUIDELINES FOR FINANCIAL MANAGEMENT REGIMES FOR AGRICULTURAL COOPERATIVES
GUIDELINES ON THE FINANCIAL MANAGEMENT REGIME FOR AGRICULTURAL COOPERATIVES DECREE JOINTLY ISSUED BY THE MINISTRY OF FINANCE AND THE MINISTRY OF AGRICULTURE AND RURAL DEVELOPMENT NUMBER 48/2002/TTLT-BTC-BNNPTNT DATED MAY 28, 2002
NĂM 2002 VỀ HƯỚNG DẪN CHẾ ĐỘ QUẢN LÝ TÀI CHÍNH ĐỐI VỚI HỢP TÁC XÃ NGHIỆP
đối với hợp tác xã nông nghiệp

 

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

 

A. GENERAL PROVISIONS

 

1. This Circular applies to agricultural cooperatives, agricultural cooperatives engaged in diversified business operations, salt production cooperatives, and other cooperatives providing similar services such as intensive land cultivation, seedling production, pest control, fertilizer supply for agriculture (hereinafter referred to as cooperatives).

2- Based on their specific characteristics and operational conditions, cooperatives shall establish cooperative charters based on the provisions of this Circular, to be approved at the General Assembly of Members as the basis for implementation, ensuring transparency, democracy, and compliance with the law.

 

B. SPECIFIC PROVISIONS

 

I. SOURCES OF FUNDS USED FOR PRODUCTION AND BUSINESS OPERATIONS

 

The sources of funds used by cooperatives for production and business operations include:

1. Capital owned by members.

1.1- Capital contributions of members:

Members joining the cooperative must contribute charter capital according to the resolution of the General Assembly of Members 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 General Assembly of Members.

Members may contribute the full amount at once 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 12 months.

Adjustments to member capital contributions shall be made according to the decision of the General Assembly of Members 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 General Assembly of Members decides to allocate capital contributions to cover losses in production and business operations for the year.

The cooperative must maintain accounting records promptly for each member's capital contribution.

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

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

- Remaining funds allocated equally as capital contributions of individual members.

- For assets serving production and business purposes such as irrigation works, power 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 will be converted into shared capital of the new cooperative, without being distributed individually to members.

+ In cases where the new cooperative is established with less than 50% of members from 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 lease of assets for production and business needs. Lease payments for the year shall be accounted for as production and business expenses and service costs of the cooperative. In cases where agricultural cooperatives participate but utilize and exploit such assets, the People's Committee of the commune shall decide on the handling of these assets. If the cooperative newly receives or leases these assets, they shall be accounted for according to current regulations regarding the receipt or leasing of assets serving production and business needs. The annual lease payment shall be recorded as part of the production and business costs and service expenses of the cooperative.

1.3- Cooperative funds: Cooperative funds are collective ownership resources of the cooperative that have not yet been utilized.

Cooperatives shall have funds deducted from post-tax profits: development production and business fund, financial reserve funds, and other funds decided by the General Assembly of Members. The rate of deduction and use of cooperative funds must be decided by the General Assembly of Members according to the following contents:

- Development production and business fund: used to expand production and business activities, update technology, agricultural extension work, and training and capacity building for cooperative cadres.

- Financial reserve fund: used to offset losses caused by natural disasters or fires, as decided by the General Assembly of Members.

- Other funds (if any): used for social welfare expenditures and rewards for collectives and individuals with outstanding achievements in business operations and product sales of the cooperative.

1.4- Assistance 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 loan amounts equal to or greater than 50% of the cooperative's charter capital must be approved by the General Assembly of Members; 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 due for distribution... Cooperatives are responsible for repaying these debts on time upon maturity.

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

 

II. MANAGEMENT OF ASSETS AND CAPITAL IN CASH FORM IN CASH

 

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. raw materials, fuel, finished products, semi-finished products, and other types of cash capital (cash on hand, bank deposits), etc.

Assets in cooperatives are divided into two categories: fixed assets and circulating 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 physical form (each unit of asset has an independent structure or is a system consisting of multiple parts of assets interconnected to perform one or several specific functions) with a value of 5 million dong or more and a usage period of over one year, participating in multiple business cycles, but maintaining their original physical form such as: houses, buildings, machines, equipment, orchards, long-term industrial crops...

Material means of labor with a value less than 5 million dong but are primary assets participating in multiple business cycles of the cooperative shall be considered as fixed assets.:

+ Breeding sows, male breeding pigs.

+ Desks, office 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 participating 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 of the Ministry of Finance and the detailed guidance below:

Cooperatives must establish regulations on the management and utilization of fixed assets at each stage, each production department, 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 used for production and business operations by the cooperative must be depreciated and included in the product and service cost to recover capital. Depreciation of fixed assets is calculated using the following formula:

		Original cost of fixed assets
Annual depreciation rate	=	---------------------------------
		Useful life in years

 

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

The following fixed assets do not accrue basic depreciation: Depreciation

+ Fixed assets invested using state budget funds, contributions from members' labor and capital (not invested using cooperative capital) serving society generally, 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, idle, or pending liquidation fixed assets.

+ 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 maintenance of fixed assets is evaluated by the user department, budgeted, and proposed to the management board for decision.

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

+ Major repair costs are accounted for as follows:

* Fully included in the production and business operation costs of the user entity in the year if the cost is small.

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

Cooperatives may invest in updating fixed assets, actively liquidate, or sell unused fixed assets to maximize efficiency in production and business operations.

For the construction and purchase of large-value fixed assets (specific levels 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 capital, cooperatives must repay the debt on time from the fixed asset depreciation fund (including depreciation of fixed assets invested using cooperative owner capital) and the cooperative's development investment fund.

Liquidation and sale of fixed assets are conducted 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 committee consists of representatives from the management board, chief accountant, supervisory board, and the other party signing and confirming the record, clearly defining responsibilities and measures for actions causing waste, embezzlement, negligence leading to damage, loss, or destruction of cooperative fixed assets. Those responsible for managing and utilizing fixed assets must have professional knowledge and technical skills for usage and preservation; they are responsible for protecting and ensuring the long-term use and efficiency of fixed assets.

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

2- Current assets.

Current assets in cooperatives include: inventory goods and monetary capital.

2.1- Inventory goods, including: various materials, fuels, 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 warehouse or yard.

Every case of entry or exit 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 responsibility to the warehouse manager. Losses exceeding the specified 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 cost of the user entity during the production and business operation or service period of the cooperative.

- The entire value of the circulating assets that have been dispatched for use must be included in the cost of the user entity during the period of production, business operations, and services 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, and the difference after compensation shall be recorded as a decrease in capital.

- At the end-of-year inventory, if raw materials, tools for production, supplies, goods, finished products in stock have market prices lower than the book value on accounting records, the cooperative may establish a provision for reduction in inventory value. The amount of the provision for reduction in value is the difference between the reduced value of inventory recorded in the books and the market value of the reduced inventory at December 31. The cooperative may record this provision for reduction in value as part of the business expenses in the period before preparing the annual financial report. The establishment and use of this provision shall be carried out according to Circular No. 107/2001/TT-BTC dated December 31, 2001 issued by the Ministry of Finance on guidelines for establishing and using provisions for reduction in inventory value, reduction in investment securities value, and provisions for doubtful debts at enterprises.

2.2- Cash Capital: 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, negotiable bonds.

The cooperative shall establish a unified management regulation and maintain detailed records to monitor cash receipts and payments, bank deposits, bank drafts, and foreign currency transactions.

The cashier shall regularly update receipts and payments and strictly adhere to the cash management regulations.

Periodically (monthly), a cash inventory must be organized and the balance of the cooperative's accounts with the bank must be reconciled.

 

III. MANAGEMENT OF REVENUE

 

1- Revenue of the cooperative includes:

1.1- Revenue from production and business activities: is the total value of products, goods, and services sold or provided by the cooperative to members and customers, which are paid for or accepted for payment (unreceived funds).

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: includes support grants from the State (agricultural incentives, subsidized electricity rates, etc.), rental income, proceeds from the liquidation or sale of fixed assets, interest income from loans, interest income from deposits, interest income from joint ventures with other entities; income from trading in government bonds, corporate bonds, and other extraordinary income.

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

2. Items that cannot be recorded as revenue include:

- Funds recovered from outstanding debts, advance payments, capital contributions from members, or joint venture investments from other organizations and individuals.

- State investment support:

+ State support for transportation and irrigation: recorded as an increase in capital.

+ Subsidies for transport costs supporting mountainous and border regions: recorded as a reduction in fees.

- Money or assets 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 not yet delivered the goods, the value of these goods shall not be recorded as revenue but only as prepayment from customers.

3. Several important points to note regarding revenue management and accounting.

- For goods consigned for sale by other units, revenue is the commission earned by the cooperative. - For processing work accepted by the cooperative, 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 price) of such products and services.

- For lease activities where rent is prepaid for multiple years, the cooperative shall account for the prepaid rent as a liability. Annual revenue from leasing is calculated by dividing the total rent by the number of years for which the rent was prepaid.

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

- For credit activities, revenue is the interest income from loans due for collection within the period.

- When the cooperative generates revenue in foreign currency, it must convert it to Vietnamese dong at the exchange rate published by the State Bank of Vietnam at the time the revenue is realized.

IV. MANAGEMENT OF PRODUCTION AND SERVICE COSTS

 

CONSUMPTION
1. Production and business activity costs in the cooperative.

 

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

The cooperative must record and reflect all actual costs incurred for each service and production activity. Management and accounting of costs shall be carried out as follows:

1.1- Direct Costs: - Material costs include: raw material costs, material costs, fuel costs, tool costs, etc. Management of material costs is conducted through two stages: material consumption levels and material prices.

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

+ Material prices: used for accounting and determining material costs, which are actual prices, including:

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

Self-manufactured material prices include: actual raw material costs from inventory plus actual costs incurred during self-production.

Cost of purchased materials: purchase price recorded on the seller's invoice plus transportation costs, loading and unloading fees, storage costs, and reasonable losses incurred during transit, and warehouse rental fees.

Cost of self-manufactured materials includes: actual cost of raw materials issued from inventory 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 shall prepare an inventory list. goods must prepare an inventory list, clearly stating the name, address of the seller, quantity of goods, unit price, total amount, signature of the seller, approval by the cooperative manager for payment.

- 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 at market rates at the time of hiring (if paid in kind, it shall be converted into monetary value).

Management staff allowance, team of each service and industry is calculated according to the provisions in point 4.b of this section - regulations on management staff allowances of cooperatives.

- Outsourced service costs: these include repair costs of fixed assets, electricity and water charges paid to branches and irrigation enterprises; freight charges for loading and unloading goods; other outsourced services and are only accounted for based on actual expenditures with valid and reasonable supporting documents as prescribed. account for the amount approved with valid and reasonable supporting documents as prescribed.

+ Marketing promotion expenses, cooperatives account for the following items under operating costs: income from market information about customers and export products, economic and trade consultancy fees, market search activities for exports, organizing exhibition booths abroad. Investment costs for establishing representative offices and warehouses abroad are accounted for as increases in fixed assets.

+ Export transaction or brokerage commission expenses: if the cooperative exports directly or through agency, such expenses can be accounted for under production costs.

The cooperative management council 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 management staff is based on the cooperative's production and business results for 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 rate 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
cooperative based on revenue

 

Revenue level (million dong)	Percentage (%) deducted from revenue
50 – 260	5%
Over 260 – 2,000	3% of additional revenue over 260 million
Over 2,000 – 12,000	2% of additional revenue over 2,000 million
Over 12,000	1% of additional revenue over 12,000 million

 

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
management of the cooperative based on income

 

Net income level (million dong)	Percentage (%) deducted from net income
10 – 270	25%
Over 270	20%

 

+ Based on the wage fund for 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

 

Position of management staff		Wage coefficient
Manager		1
Deputy Manager		0,8
Member of the Management Council		0,7
Head of Supervisory Board (Supervisory Board members receive salaries based on specific workload assigned)		0,7 - 0,8
…on…day…month…year…		0,8
Accountant		0,6
Cashier, warehouse keeper, technical staff		0,5
Service team leader Team leaders of service reception teams, production teams	linked to actual revenue achieved	0,4 0,3

 

- Repair costs of office fixed assets

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

- Other monetary expense items such as: interest expense on borrowed capital from organizations and individuals, sales expenses, business license tax, property tax, VAT payable to the State.

Particularly, hospitality, ceremonial expenses, transaction costs serving the production and business operations of the cooperative, conference expenses 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 cadres and members: Depending on specific conditions the cooperative applies Circular No. 94/1998/TT-BTC dated June 30, 1998, of the Ministry of Finance to establish travel expense regulations for cadres and members dispatched by the cooperative management council for work 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 expense items such as: write-off expenses, liquidation expenses of fixed assets, collection expenses...

Cooperatives may include these expenses in operating costs when determining corporate income tax according to the provisions of 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: Labor Law, Tax Law, Environmental Protection Law, Traffic Law, violation of reporting and statistical 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 due to a group of people or an individual's violation then the group or individual must pay the fine.

- Investment construction project costs, purchase of fixed assets. Interest payments on borrowed funds for investment construction projects during the period before completion and put into use shall be accounted for as investment construction project costs.

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

- 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 cost of unfinished products at the beginning of the period, adding the direct production costs incurred during the period, and subtracting the cost of unfinished products at the end of the period.

- 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 may be allocated in accordance with specific circumstances to ensure they match the volume of products consumed during the period, opening inventory, and unfinished products at the end of the period.

Depending on the conditions of production and business operations, cooperatives determine the objects and select appropriate methods to calculate the cost of products and services.

 

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 the nature of the debt, including: payable to banks and financial institutions, payable to suppliers, payable to the state, payable to members, and other debts payable; short-term debts, long-term debts.

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

Accounting tracks the repayment of loans, implements checks and supervision to ensure that borrowed funds are used for their intended purposes and that debts are repaid on time to avoid 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 paid the full amount.

- Receivable from member households and farmers: these are costs incurred by the cooperative for services such as irrigation, plant protection, veterinary care, scientific and technical assistance, advance material supplies... which member households and farmers have not yet paid or have not paid in full to the cooperative.

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

2.2- Cooperatives must maintain detailed records to track each debtor, the content of each receivable, and each payment made. For receivables in kind, cooperatives must monitor to recover the physical items to preserve capital when prices fluctuate. - For receivables from regular customers, periodic reconciliation of receivables, payments received, and remaining amounts must be conducted, and the debt must be confirmed in writing with the cooperative.

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

Cooperatives need to record in detail each transaction for each debtor; if team leaders borrow on behalf of others, the debtors cannot be recorded as member payments through teams or groups.

- Difficult-to-collect receivables are debts that have been overdue for two years or more, with the cooperative having attempted multiple collections but still unable to recover them; or debts that are less than two years overdue but the debtor entity is currently under consideration for dissolution or bankruptcy, the debtor has fled, or is being prosecuted, detained, or tried by legal authorities.

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

When preparing annual financial reports, cooperatives can establish provisions for difficult-to-collect receivables and record them as cooperative management expenses for the year. The level of provision depends on potential losses for each debt, but the total maximum provision cannot exceed 20% of the total 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, issued by the Ministry of Finance, "Guidelines for the Establishment and Use of Provisions for Inventory Write-downs, Investment Securities Write-downs, and Bad Debt Provisions at Enterprises."

- Unrecoverable receivables are debts owed by the cooperative to debtors who are organizations that have been dissolved, bankrupted, or ceased operations without the ability to pay; individuals who have died, disappeared, are serving prison sentences, or are being prosecuted, detained, or tried by legal authorities, but there is sufficient evidence proving that the debt cannot be recovered; debts that have been overdue for more than three years, and the cooperative has applied all measures but still cannot recover the debt...

Annually, cooperatives establish 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 cooperative's board of directors must report to the general assembly of members to reduce capital. 3. Management and tracking of advances and advance payments.

Advances are amounts of money advanced by the cooperative to staff and members to carry out tasks

approved by the cooperative director.

Contents of advances in cooperatives include: advances for purchasing materials, tools, production supplies, fixed assets; advances for wages, travel expenses... The tracking and recording of advances are implemented according to the following regulations: - The person receiving the advance must be a staff member or member of the cooperative.

- The advance request form must clearly state the name, address (unit, department), and amount requested, the reason for the advance, the purpose of using the advance, and the repayment date, which 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.

- The advance must be repaid immediately upon completion of the task. If repayment is delayed beyond the date specified on the advance request form, the person

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

- Advance payments shall be settled immediately upon completion of the work. If settlement is delayed beyond the date specified on the advance payment request, the person The advance payment and the accounting personnel monitoring such advances shall be responsible for late payment penalties according to the financial and accounting management regulations of the cooperative.

- The recipient of the advance payment must use the funds for the purposes stated on the advance payment receipt, settle within the due date, and provide all original supporting documents. If the recipient has not settled the previous advance payment, they shall not be granted a second advance. receiving the advance payment must settle within the stipulated time frame and provide all original supporting documents. An individual who has not yet settled a previous advance payment shall not be granted a second advance payment. ứng tiếp lần thứ hai.

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

4. Monitoring, managing, and settling state taxes.

The cooperative shall proactively declare, calculate, and determine the amount of tax payable under current tax laws, track the amounts due, paid, and still owing for each tax item in detail according to the financial reporting model for agricultural cooperatives, and shall not delay tax payments.

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

Transactions with members and employees of the cooperative include wages, interest, and other amounts that the cooperative is required to pay.

The cooperative must maintain detailed records to monitor each individual and each payment owed. For payments made in kind, detailed records must be kept of the quantity, unit price, and total amount payable; simultaneously, the cooperative must maintain settlement records for member households to ensure financial transparency with them 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 previous years' losses of the cooperative as stipulated by tax laws.

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

- Deducting amounts for breach of contract and violation of laws 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 prescribed 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 to support management and operation of the cooperative and state oversight 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 these reports to the Department of Agriculture and Rural Development, the registration authority, the county (district) finance department, and the county (district) tax office.

The county (district) finance department and the Department of Agriculture and Rural Development have the responsibility to compile and submit 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 the financial and business situation, capital usage, etc., of the cooperative, and providing comments and recommendations to the Ministry of Finance (Enterprise Financial Department) and the Ministry of Agriculture and Rural Development (Rural Policy Department).

 

VIII. FINANCIAL TRANSPARENCY AND FINANCIAL AUDIT
IN THE COOPERATIVE

 

1. Financial Transparency.

Annually and semi-annually, the cooperative leader is responsible for publicly reporting financial statements to members and before the General Assembly of Cooperative 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; services and each product; profit and loss results of these activities.

- Profit distribution results according to the cooperative charter and resolutions of the member assembly - 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, due debts, and difficult-to-collect debts.

- Quantity and value of inventory products and materials; cash balance in the fund; unsold products and unused assets, proposing solutions to utilize capital effectively and efficiently.

2. Financial Audit.

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

- The audit committee of the cooperative is responsible for supervising and auditing financial and accounting activities according to the cooperative's charter. Auditing and controlling management and utilization standards for materials, assets, capital, and reserves of the cooperative; managing income and expenditures and income distribution within the cooperative; auditing the implementation of financial plans and compliance with state financial policies.

- State management agencies for agricultural cooperatives have the duty to audit compliance with financial and accounting systems of the cooperative.

 

IX. IMPLEMENTATION ORGANIZATION

 

1- The Ministry of Finance (Enterprise Financial Department), the Ministry of Agriculture and Rural Development (Rural Policy Department) are responsible for directing provincial finance and price departments and provincial agriculture and rural development departments to implement this Circular to cooperatives; regularly guiding and auditing the implementation of financial management systems for cooperatives and implementing reward and punishment systems as prescribed.

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

3- This Circular takes effect fifteen days from the date of signature. Previous regulations inconsistent with those in this Circular are abolished.

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.