Circular No. 53/2006/TT-BTC guiding the application of management accounting in enterprises

CIRCULAR

Guidelines for Applying Management Accounting in Enterprises

_________________

 

Based on the Accounting Law No. 03/2003/QH11 dated June 17, 2003;

 

Based on the Government Decree No. 129/2004/NĐ-CP dated May 31, 2004 detailing and guiding the implementation of certain provisions of the Accounting Law in business operations;

Based on the Government Decree No. 77/2003/NĐ-CP dated July 1, 2003 stipulating the functions, tasks, authorities, and organizational structure of the Ministry of Finance;

In order to assist production and trading enterprises in organizing accounting work effectively, the Ministry of Finance provides guidelines for management accounting in enterprises as follows:

Part I

GENERAL PROVISIONS

1. Management Accounting

a) Management accounting involves collecting, processing, analyzing, and providing economic and financial information according to managerial requirements and economic and financial decision-making within the accounting unit (Accounting Law, Clause 3, Article 4).

Management accounting aims to provide information about internal activities of the enterprise, such as costs of each department (cost center), each task, product; analysis and evaluation of actual performance against plans regarding revenue, costs, profit; management of assets, materials, capital, accounts receivable; analysis of the relationship between costs and volume with profit; selection of appropriate information for short-term and long-term investment decisions; preparation of budget forecasts for production and business operations; etc., to serve operational control, inspection, and economic decision-making. Management accounting is the responsibility of each enterprise, while the State only guides principles, organizational methods, and main contents and methods of management accounting to facilitate enterprise implementation.

b) The recipients of management accounting information are the enterprise's leadership and those involved in managing and operating production and business activities.

Enterprises are not required to disclose management accounting information publicly except where otherwise provided by law.

c) Units of measurement used in management accounting include monetary units, physical units, labor time, or other units of measurement as required by the enterprise's management needs.

d) Principles for organizing the management accounting information system: The organization of the management accounting information system does not necessarily have to comply fully with accounting principles and can be implemented according to internal regulations of the enterprise to establish an appropriate management information system based on specific management requirements of each enterprise. The enterprise has full authority to decide on the application of accounting vouchers, organization of accounting ledgers, detailed application of accounting accounts, and design of necessary management accounting reports to serve the enterprise's management accounting.

đ) Enterprises may use all information and data from financial accounting to coordinate and serve management accounting.

2. Scope of Application of this Circular

This Circular applies to enterprises in production, trading, commerce, and service sectors.

For enterprises in the financial and banking sectors, such as insurance companies, securities companies, fund management companies, credit organizations, financial institutions, etc., they should apply relevant contents guided by this Circular.

3. Tasks of Management Accounting in Enterprises

a) Collecting, processing accounting information and data according to the scope and content of management accounting determined by the unit for each period.

b) Checking and supervising standards, norms, budgets.

c) Providing internal management information through management accounting reports.

d) Organizing the analysis of information to serve planning and decision-making requirements of the enterprise's leadership.

4. Content, Scope, and Period of Management Accounting

4.1. Content of Management Accounting

a) Main and common content of management accounting in enterprises includes:

- Cost and product pricing management accounting;

- Sales and business results management accounting;

- Analysis of the relationship between costs, volume, and profit;

- Selection of appropriate information for decision-making;

- Preparation of production and business budget forecasts;

- Other management accounting items:

+ Fixed asset management accounting;

+ Inventory management accounting;

+ Labor and salary management accounting;

+ Debt management accounting.

b) In addition to the main contents mentioned above, enterprises may implement other management accounting contents according to their management needs.

4.2. Scope of Management Accounting Is not limited and is determined by the enterprise's need for management accounting information throughout all stages of organizing, managing production and business operations, planning, inspection, organization, operation, decision-making, and the level and ability to organize management accounting work of each enterprise.

4.3. The period of management accounting is usually monthly, quarterly, or annually like the financial accounting period. Enterprises may determine different periods for management accounting (such as daily, weekly, or any other period) based on their own requirements. month, quarter, year as the financial accounting period. The enterprise may decide on a different management accounting period (which could be a day, week, or any other period) as required by the enterprise.

5. Terms Used in This Circular Are Understood As Follows:

- Responsibility Center: Is a part (workshop, production line; department, division; company or entire company) within an organization where the manager of that part has the right to manage and is responsible for the costs incurred, income generated, or capital invested in business operations.

- Cost Center: Is a responsibility center where the manager only has the right to manage costs incurred within their managed part. A cost center can be a department (workshop, team, group, etc.) or a stage of activity (rough processing stage, cutting stage, polishing stage, etc.).

- Differential Cost: Is a cost present in one option but not in another or only partially present in another option. Differential cost is one of the important bases for selecting investment options or production and business operations.

- Opportunity Cost: Is the potential benefit lost by choosing one option (or action) over another.

- Sunk Cost: It is a type of cost that the enterprise will incur regardless of which option or action is chosen. Sunk costs exist in all options and therefore have no differential effect and need not be considered when comparing and selecting optimal options or actions.

- Variable costs (referred to as variable expenses): These are production and business costs that change proportionally in total amount and ratio with fluctuations in product volume, including direct raw material costs, direct labor costs, and certain common production costs such as labor costs, electricity and water costs, spare parts for repairs, etc. Variable costs do not change when calculated per unit of product or work.

- Fixed costs (also called fixed expenses): These are costs whose total amount does not change with fluctuations in product volume or work, including depreciation costs of fixed assets, salaries of employees and managers, etc. The fixed cost per unit of product or work has an inverse proportional relationship with volume, products, or work.

- Contribution margin on variable expenses: It is the difference between revenue and total variable expenses (including production costs based on variable expenses, variable selling expenses, and variable administrative expenses).

- Break-even point: It is a point where total revenue equals total costs or where the contribution margin on variable expenses equals total fixed costs.

- Short-term decision: It is a business decision with an effective period, influence period, and implementation period usually under one year or shorter than one typical business cycle, such as decisions regarding the existence or elimination of a business unit during the planning period; decisions on whether to produce internally or purchase externally raw materials and products; decisions on selling at the semi-finished stage or finished stage;...

- Long-term decision: These are decisions with an effective period, influence period, and implementation period over one year or longer than one business cycle (for example, investment decisions for fixed assets for enterprises; long-term financial investment decisions;...).

- Appropriate information: Such information must meet two basic criteria:

+ The information must be related to the future;

+ The information must differ between the options being considered and selected.

Part II

IMPLEMENTATION OF MANAGEMENT ACCOUNTING

1. The implementation of management accounting in enterprises shall comply with the following requirements:

a) Timely provision of complete information according to management needs about the costs of each task, department, project, product, etc.;

b) Timely provision of operational information, standards, unit prices, etc., serving the preparation of plans, inspections, operations, and decision-making;

c) Ensuring the provision of more detailed and specific information compared to financial accounting;

d) Establishing appropriate principles and methods to ensure comparability between financial accounting and management accounting as well as between different periods of operation and between budget and actual performance.

2. Implementation of management accounting in enterprises includes the following contents: Organizing the application of accounting vouchers, accounting accounts, accounting ledgers; Organizing the preparation of management accounting reports and organizing the analysis of economic and financial information.

3. Principles for organizing the application of Accounting Vouchers

a) Applying principles and methods for the preparation, circulation, management, and use of accounting vouchers suitable to the specific conditions of the enterprise;

b) Specifying and supplementing necessary contents into each prescribed accounting voucher form to serve the collection of internal management information within the enterprise;

c) Using initial vouchers and statistical vouchers in the production and business operations of the enterprise (Production orders; Quantity sheets; Labor dispatch decisions; Asset dispatch (transfer) decisions; Production situation investigation records,...) for management accounting of product quantities (tasks), labor time, and planning;

d) Designing and using internal vouchers for management accounting without national regulations (Sales expense allocation tables, administrative expense allocation tables,...); Establishing a system for timely and rapid information collection and provision through email, fax, and other communication means.

4. Principles for organizing the application of Accounting Accounts

4.1. Enterprises base their detailed classification of accounting accounts on the system issued by the Ministry of Finance or approved by the Ministry of Finance for application in the enterprise, in accordance with the levels (level 2, 3, 4) suitable for the prepared plans and budgets and the information provision requirements of management accounting within the enterprise. 4.2. Detailed classification of accounting accounts at various levels is based on the following requirements:

a) Starting from the information provision requirements of management accounting for each level of management;

b) Accounting accounts that are interrelated must ensure consistency in symbols, levels, etc. (For example: Account 15411, 51111, 63211, 91111,...);

c) Detailed classification of accounts must not distort the content, structure, and recording method of the accounts.

4.3. Enterprises may open detailed accounting accounts at various levels in the following cases:

a) Accounting for production costs and determining product costs by task; Product, item, production and business unit, etc.;

b) Accounting for sales and determining business results by task; Product, item, production and business unit, etc.;

c) Accounting for inventory by item and type;

d) Accounting for sources of capital, loans, receivables, payables, etc., by subject and type.

In addition, enterprises may design detailed classifications of accounting accounts according to the information provision requirements of management accounting.

5. Principles for organizing the application of Accounting Ledgers

a) Enterprises base their supplementary specific indicators and requirements for accounting ledgers on the system issued by the Ministry of Finance or approved by the Ministry of Finance for application in the enterprise, serving management accounting within the enterprise. Any supplementation or design of ledger content must not distort the prescribed indicators on the ledgers and must be consistent with the enterprise's management requirements.

a) The enterprise bases itself on the accounting ledger system issued by the Ministry of Finance or approved for application by the Ministry of Finance to supplement specific indicators and requirements serving management accounting within the enterprise. The supplementation or design of ledger contents must not distort the content of the prescribed indicators on the ledgers and must be consistent with the enterprise's management requirements.

b) The enterprise may design new accounting books suitable for managing costs, revenues, and determining business results by department, product line, work, and other requirements of management accounting (Cost calculation sheet; Production report; Detailed sales ledger by customer, etc., as shown in the attached annex).

6. Requirements and contents of Management Accounting Reports

6.1. Requirements for establishing a system of management accounting reports

a) The system of management accounting reports must be established to meet the information provision needs for internal management of each specific enterprise.

b) The content of the system of management accounting reports must ensure the provision of comprehensive and comparable information to serve management, operation, and economic decision-making of the enterprise.

c) Indicators in management accounting reports need to be designed to align with the indicators of plans, budgets, and financial statements but can be adjusted according to management requirements at different levels.

6.2. System of Management Accounting Reports

6.2.1. The main components of a management accounting reporting system of an enterprise usually include:

a) Implementation status report:

- Report on revenue, expenses, and profit of each type of product, goods, and service;

- Report on quantity of goods purchased and sold during the period by customer, selling price, discount, and other promotional forms;

- Detailed report on completed and consumed product (service) quantities;

- Report on compliance with inventory stock standards;

- Report on labor usage and productivity;

- Detailed report on completed products and tasks;

- Inventory balance report for raw materials, materials, products, and goods;

- Detailed report on receivables by due date, debtor, and collection ability;

- Detailed report on debts and liabilities by due date and creditor;

- Departmental report for responsibility centers;

- Detailed report on changes in equity capital.

b) Analysis report:

- Analysis of the relationship between costs, volume, and profit;

- Financial situation analysis of the enterprise;

- Analysis of factors affecting the implementation of production and financial plans;

In addition, based on management and operational requirements at specific stages, the enterprise may prepare other management accounting reports.

6.2.2. Some main management accounting report templates: See the attached annex.

7. Archiving of Management Accounting Documentation

The archiving of management accounting documentation, especially comprehensive and analytical reports on business performance, business strategy, etc., shall be carried out according to the decision of the Legal Representative of the accounting unit based on the application of regulations on archiving accounting documentation.

Part III

SOME MAIN CONTENTS OF MANAGEMENT ACCOUNTING

1. Cost and Product Cost Management Accounting

1.1. Cost Management Accounting

Enterprises base their organization of cost aggregation on the characteristics of their operations and management requirements, grouping costs according to cost centers such as teams, workshops, or individual works, products, production stages, or the entire production process, and determine various types of costs of the enterprise as follows:

1.1.1. Classification of Costs

The classification of costs by enterprises aims to serve the management of production and business activities, therefore, depending on the management objectives and requirements of the enterprise at different times and circumstances, appropriate classification criteria should be selected.

a) For financial accounting, production and business costs are classified according to the following criteria:

- According to economic content, costs are divided into two categories:

+ Production costs: These are costs forming the value of produced products, including direct material costs, direct labor costs, and common production costs;

+ Non-production costs: These are costs that do not increase the value of produced products but are necessary to complete the production and business processes, including sales costs and administrative management costs.

- According to the relationship between costs and items on the financial statement, costs are divided into:

+ Period costs: These are costs incurred within a business period (by time) that may relate to multiple objects or products. Period costs have the characteristic of reducing profits in the business period in which they occur;

+ Product costs: These are costs constituting the value of completed units of products, inventory, or sold products.

b) For management accounting, production and business costs are classified according to the following criteria:

- According to the relationship with planning and control, costs are divided into:

+ Variable costs;

+ Fixed costs;

+ Mixed costs: These are costs that include both variable and fixed elements (Example: Telephone costs, maintenance and repair costs of fixed assets,...).

- According to the nature of costs, costs are divided into:

+ Direct costs: These are costs constituting products, closely related to a specific finished product or service (Example: Direct material costs, direct labor costs,...);

+ Indirect costs are costs related to multiple products or services without increasing their value (Example: Administrative management costs, salaries of managerial staff,...). Indirect costs must be allocated to each unit, product, or task;

+ Controllable costs are costs that management can predict and decide upon;

+ Uncontrollable costs are costs that management cannot predict and are outside their authority to decide.

c) According to the requirement for using costs in project investment selection, costs of a project are classified as follows:

- Appropriate costs;

- Differential costs;

- Opportunity costs;

- Sunk costs.

1.1.2. Methods of Cost Aggregation

Enterprises need to select appropriate methods of cost aggregation for each type of cost:

a) Direct method: Applied when costs arise only in relation to a single cost-bearing object. Under this method, the costs of an object are directly aggregated to that object.

b) Allocation method: Applied to cases where costs incurred relate to multiple cost-bearing entities. When implementing the allocation method, enterprises may choose one of the following bases for allocation: hours worked, days worked, machine operating hours, area of use, etc., and the allocation method can be direct or hierarchical.

1.1.3. Determining Cost Centers

The determination of cost centers depends on the production process and the scale of each enterprise. Cost centers are typically classified as follows:

- Primary cost centers, such as: Purchasing centers, production centers (workshops, production departments);

- Secondary cost centers, such as: Administrative and management centers, accounting and finance centers,...

1.2. Product Cost Management Accounting

1.2.1. Methods of Calculating Product Costs

Enterprises select one method or combine several methods of calculating product costs based on the characteristics of the products or the relationship between the cost accounting object and the product costing object.

The main methods of calculating product costs are:

a) Job-order costing method

Calculating costs according to work (or product) involves collecting and allocating direct material costs, direct labor costs, and common production costs related to a specific job, a single product, or a specific group of products, or a specific order:

+ Direct material costs and direct labor costs are directly collected for each individual job or product;

+ Common production costs: When common production costs occur, they are first collected together for all jobs and products, then allocated subsequently.

Applying this method, enterprises base their decision on specific circumstances to choose one of the following common production cost allocation methods:

+ Allocating common production costs based on actual usage;

Under this method, enterprises will adjust the difference between the estimated allocation amount and the actual common costs incurred, increasing or decreasing "Cost of Goods Sold" for the period (If the difference is insignificant), or will allocate the difference among unfinished production costs, finished goods, and cost of goods sold based on the ratio of the balances (or cumulative amounts) of these accounts before the allocation of common production cost differences.

+ Estimating common production costs for each job or product at the beginning of the period, then adjusting the difference between actual costs incurred and estimated common production costs at the end of the period.

b) Process costing method (Total cost method);

c) Standard costing method;

d) Ratio method;

đ) By-product cost exclusion method.

1.2.2. Object and Period of Product Cost Calculationh

The object of cost calculation can be a detailed finished product, a finished product, a group of finished products, a specific job, or the cost of a particular business sector. Enterprises may rely on one or more of the following bases to determine the appropriate cost calculation object:

+ Organizational and management characteristics;

+ Production technology process characteristics;

+ Accounting conditions and management requirements of the enterprise.

b) The period for cost calculation is usually monthly, quarterly, or annually. Enterprises base their determination of the cost calculation period on the type of product, production process, and production characteristics. For individual products, the cost calculation period ends when the individual product is completed.

1.2.3. The Accounting Procedure for Production Costs and Product Cost Calculation Follows These Steps:

+ Collecting costs (direct, indirect, and allocated);

+ Summarizing costs, handling excesses and shortages;

+ Inventory and valuation of unfinished products, determining unfinished costs;

+ Determining the applicable cost calculation method;

+ Preparing cost reports (cost sheets) for products.

2. Sales and Business Results Management Accounting

2.1. Pricing Products

a) Enterprises determine selling prices based on the principle of covering costs and achieving desired profits.

b) Enterprises may base their decisions on specific circumstances, conditions, and types of selling prices (regular selling price, new product selling price, internal selling price, competitive selling price, etc.) to choose a basis for reasonably determining selling prices (For example, based on production costs, variable costs in total product costs, raw material costs, labor costs, etc.).

Example: Pricing based on production costs using the markup formula:

 

Selling Price

=

Production Cost x (1 + Markup Percentage)

 

 

 

Markup Percentage percentage additional

=

Recovery rate desired --------------------- Number of products x sold

+ ----- x

Sales expenses, management expenses business management ----------------------------- Production cost of 1 sold product

 

 

 

Recovery rate desired

=

Return on investment capital

x

Total capital a) For PPP projects, the tenderer shall post the selection results of investors and attach the approval decision on the System no later than ten days from the date the document is issued in accordance with point b of Clause 2, Article 4 of Decree No. 35/2021/NĐ-CP.

 

2.2. Merchandise accounting and sales results

a) The enterprise may organize merchandise accounting according to each sales method and payment method (cash sale, installment sale, barter sale through agents), according to each sales department (region 1, region 2,...), according to each group of products, main types of activities. The enterprise can also organize merchandise accounting by combining multiple criteria with each other, depending on its management requirements and specific conditions of the enterprise at different times.

b) The enterprise needs to establish account models, accounting books, and sales reports and sales results in a continuous and flexible manner to be able to account for various sales cases during each stage, meeting the requirement to determine the results of production and business operations of the enterprise.

3. Analysis of the relationship between costs, volume, and profit

The relationship between costs, volume, and profit is the relationship between selling price factors, volume (quantity, level of activity), cost structure (fixed, variable) and the impact of these factors on the profit of the enterprise.

The enterprise needs to analyze this relationship through a system of analytical indicators, including:

+ Profit based on unit variable cost (also called residual margin);

+ Total profit based on variable cost;

+ Variable cost profit ratio;

+ Cost structure;

+ Economic leverage;

+ Break-even point (output, revenue, capacity, break-even time,...);

..........

Analyzing this relationship helps the enterprise make decisions in production and business to maximize profits such as: Selecting products and production volume, selling price, cost standards.

4. Selection of appropriate information for decision-making

Decision-making is a basic function of business management. Common decisions in enterprises include: Short-term decisions and long-term decisions.

4.1. Appropriate information for short-term decision-making

To select appropriate information for short-term decision-making, corporate management accounting needs to perform the following steps:

+ Collect relevant information (costs, revenues) related to business options requiring decisions;

+ Eliminate unsuitable information such as sunk costs, similar costs (both quantity and nature) and revenues of the options being considered;

+ Determine suitable information;

+ Make a decision.

4.2. Appropriate information for long-term investment decision-making

Long-term investment decisions usually involve: Decisions to invest in new assets or continue using old assets; expanding production scale; leasing or purchasing fixed assets; choosing equipment within an appropriate period;...

To provide information for leadership to make investment decisions, corporate management accounting needs to perform the following tasks:

- Categorize decisions into two types:

+ Screening decisions;

+ Priority decisions.

- Collect and classify information appropriately for the type of decision.

- Choose one of the appropriate methods to determine information (investment project) suitable for the type of decision:

+ Payback period method;

+ Net present value method;

+ Adjusted rate of return method;

+ Adjusted index of return method.

- Make a decision to choose the option after having appropriate information.

5. Preparation of production and business budget estimates

5.1. Requirements for preparing production and business budget estimates

a) The system of budget estimate indicators for production and business activities is established separately for each process, such as: Purchasing process, production process, product consumption process of production and business activities of the enterprise and detailed for each content: Cash capital; Inventory; Each type of business expense: Sales expenses; Management expenses; Each type of consolidated report: Balance sheet, Income statement,...

b) The production and business budget is prepared for the entire year and divided into quarters and months within the year. However, to ensure the accuracy and feasibility of the preparation, at the end of each month and quarter, the enterprise bases its budget on the actual implementation of that month's and quarter's budget and the influencing factors of the next month and quarter to prepare the budget.

However, when building each budget estimate indicator, the enterprise needs to link it with other budget estimate indicators to form a system of budget estimate indicators.

The system of budget estimate indicators includes:

- Budget estimate indicator for product, goods, and service consumption;

- Budget estimate indicator for production output;

- Budget estimate indicator for production cost;

- Budget estimate indicator for inventory;

- Budget estimate indicator for sales expenses;

- Budget estimate indicator for management expenses;

- Budget estimate indicator for cash capital;

- Budget estimate indicator for Income Statement;

- Budget estimate indicator for Balance Sheet.

5.2. Procedure for preparing production and business budget estimates

a) Departments within the enterprise directly responsible for preparing their own production and business budget estimates.

b) The enterprise's accounting department is responsible for consolidating the budgets of all departments into a comprehensive budget for the entire enterprise, while also organizing meetings with relevant departments to receive feedback for revisions and improvements to the budget.

c) Submit to the enterprise leadership. After receiving the leadership's comments, disseminate again to all departments within the enterprise for implementation.

6. Accounting management of other accounts

6.1. Accounting management of Fixed Assets

a) The enterprise must maintain detailed and consolidated accounting books to reflect indicators regarding the value of fixed assets management, utilization, and analysis of their effectiveness at the entire unit level, departmental levels, and major categories of fixed assets. At the same time, it must provide specific needs for the use of fixed assets by each department and the entire enterprise to assist enterprise leaders in making decisions on exploiting existing fixed asset capabilities and suitable, effective new investments.

b) The enterprise may determine the structure of fixed assets through appropriate classification methods, while combining accounting for each category of fixed assets to meet the requirements of providing information for long-term investment planning periods, analyzing the effectiveness of fixed asset usage, and losses due to improper use.

c) The enterprise needs to define the scope of establishing management accounting systems to develop appropriate fixed asset account models and accounting books or utilize financial accounting materials for analysis.

6.2. Management Accounting for Inventory

a) The enterprise must establish material item lists and organize management accounting for the quantity and value of current inventory, used materials, and sold items according to internal management requirements.

b) To accurately account for used materials and reasonable inventory, the enterprise must determine an appropriate method for calculating inventory costs that fit its specific conditions and circumstances, meeting both management requirements and future planning needs.

c) The enterprise sets raw material and material cost standards for each task, product, and establishes reserve standards for each inventory item list.

d) Compare established standards with actual performance, make observations, and recommendations.

6.3. Management Accounting for Labor and Wages

a) Requirements for enterprises include:

- Establishing work hour standards and wage rates for different skill levels of workers and employees;

- Setting labor cost consumption standards for each stage of work, product, service, etc.;

- Determining and controlling the working hours of each worker;

- Fully calculating and allocating labor costs to various cost centers and reasonable product costs.

b) Implementation methods:

- Enterprises need to design and operate well the attendance, payroll calculation, and payment system in accordance with cost centers and product costs.

- Applying appropriate labor cost accounting methods (depending on time and conditions):

+ Direct method;

+ Allocation method: This method is applied when workers simultaneously participate in multiple tasks, and the enterprise needs to choose an appropriate allocation basis.

6.4. Management Accounting for Debts

a) The requirement for management accounting of debts is to ensure the provision of information about creditors, types of debt by term, repayment period, and quality of the debt at any time when management requires it.

b) Based on the actual situation of the enterprise, design accounts reflecting debts by creditor, debtor, and analyze according to the quality of debt and repayment period, or reflect debts by repayment period, and analyze according to creditor and the quality of the debt.

Part IV

ORGANIZATION OF MANAGEMENT ACCOUNTING SYSTEM AND PERSONNEL

MANAGEMENT ACCOUNTANT

1. Organization of the management accounting system

1.1. The organization of the management accounting system of the enterprise must be consistent with the characteristics of operations, scale of investment, and production and business organizational areas of the enterprise, as well as the degree of economic and financial management decentralization within the enterprise. The accounting system must be streamlined, scientific, rational, and highly efficient in providing information to the enterprise leadership.

1.2. Enterprises base on their specific conditions (Scale; Staff qualifications; Production, business, management characteristics, technical means...) to organize the management accounting system in one of the following forms:

a) Combined form: Organizing a combination between financial accounting and management accounting by accounting functions: Cost accounting and pricing, sales accounting, etc. Accountants who follow a particular accounting function will perform both financial and management accounting for that function. In addition, the enterprise must arrange personnel to handle other general management accounting tasks, such as: Collecting and analyzing information for budget preparation and decision-making in business management. These job contents can be arranged for a general accountant or handled by the chief accountant.

b) Separate form: Organizing a separate management accounting department from the financial accounting department within the accounting office of the enterprise. This form is only suitable for large enterprises such as holding companies, economic groups, etc.

c) Hybrid form: Combining the two forms mentioned above: Organizing a separate cost and pricing management accounting department, while other contents follow the combined form.

2. Personnel for management accounting

2.1. Enterprises need to arrange personnel for management accounting who have sufficient capacity and qualifications based on applying the criteria and conditions for accountants stipulated in the Accounting Law.

In cases where the enterprise organizes a separate management accounting department distinct from the financial accounting department, personnel for management accounting must meet the following criteria, rights, and responsibilities:

a) Criteria for personnel for management accounting:

+ Possess professional ethics, honesty, integrity, and a sense of compliance with laws;

+ Have professional expertise in accounting.

b) Rights of personnel for management accounting:

Personnel for management accounting have professional independence in accounting or statistics; They have the right to independently analyze, evaluate, and propose.

c) Responsibilities of personnel for management accounting:

The management accountant shall be responsible for complying with the accounting laws, performing assigned tasks, and bearing professional responsibility according to the requirements of the business leadership. When there is a change in the management accountant, the outgoing management accountant must hand over accounting work and accounting documents to the incoming management accountant. The outgoing management accountant shall be responsible for the accounting work during their tenure as a management accountant.

2.2. Hiring a Management Accountant

For accounting units that lack the conditions or fail to arrange a management accountant, they may hire a management accountant in accordance with the following guidelines:

- The accounting unit may enter into a contract with an accounting service company or an individual registered to provide accounting services to hire a management accountant in accordance with the law;

- The hiring of a management accountant must be formalized in a contract in accordance with the law;

- The accounting unit hiring a management accountant shall be responsible for providing all relevant information and documents related to the hired accounting work in a timely and truthful manner, and paying the accounting service fee fully and promptly as agreed in the contract;

- The enterprise or individual providing management accounting services shall be responsible for the accounting information and figures as agreed in the contract.

3. Chief Accountant of the Business shall be responsible for organizing the implementation of management accounting within the business and shall bear responsibility before the business leadership for the accounting information and figures provided.

Part V

IMPLEMENTING PROVISIONS

1. This Circular shall take effect fifteen days from the date of publication in the Official Gazette.

2. Enterprises shall base themselves on the guidance provided in this Circular to establish and organize appropriate and effective management accounting at the enterprise and its member enterprises (for Holding Companies), subordinate units (for Companies).

3. Universities, Academies, Colleges, and Secondary Schools of Economics - Finance - Accounting shall develop teaching materials on management accounting based on the content of this Circular./.