CIRCULAR

Provisions on management of commune budgets and other financial activities of communes, towns, and wards

Pursuant to the State Budget Law number 01/2002/QH11 dated December 16, 2002;

Pursuant to Decree No. 60/2003/NĐ-CP dated June 6, 2003, promulgated by the Government detailing and guiding the implementation of the Law on State Budget;

The Ministry of Finance shall guide the management of commune budgets and other financial activities of communes, towns, and wards as follows:

PART I

General Provisions

1. Financial activities of communes, towns, and wards (hereinafter referred to collectively as communes) include the commune budget and other financial activities of communes.

The People's Commune Council organizes unified management of the commune budget and other financial activities of communes.

Management of the commune budget and other financial activities of communes must be carried out according to the principles of democracy, transparency, efficiency, and thrift.

2. The commune budget is a part of the state budget:

2.1. Revenue of the commune budget includes revenue from the state budget allocated to the commune budget and contributions voluntarily collected from organizations and individuals for the construction of infrastructure projects as decided by the Commune People's Council to be managed under the commune budget.

a) Commune budget revenue includes: revenues that the commune budget enjoys 100%, revenues shared between the commune budget and higher-level budgets at a certain percentage (%), and supplementary revenues from higher-level budgets.

b) For revenue from public land funds, public assets, and profits from public property, which are regular sources of revenue for the commune budget, the commune shall not tender for lump-sum collection over multiple years affecting the budget balance of subsequent years; in cases where it is truly necessary to collect once for several years, such collection can only be done during the term of the Commune People's Council and cannot be collected before the term of the next Commune People's Council, except for the auction of land use rights as provided by law.

c) Allocation of revenue sources to the commune budget must ensure the principle:

Consistency with the economic and social management hierarchy, national defense, and security of the State and the functions and responsibilities of commune-level state management;

Consistency with the division of revenue sources between the central government budget and local government budgets;

The percentage (%) of revenue allocation to the commune budget from certain revenue items shall not exceed the percentage of revenue allocation between the central government budget and local government budgets determined by the Standing Committee of the National Assembly to be assigned to each province for those revenue items; specifically, for the five types of taxes and fees stipulated in point b, Clause 1, Article 34 of the State Budget Law, the minimum percentage allocated to the commune budget is 70%;

At the end of each stabilization period, based on the revenue capacity and expenditure tasks of the local government budget, the Provincial People's Council (collectively referred to as the Provincial People's Council) shall adjust the percentage (%) of revenue allocation among various levels of budget within the locality.

When allocating revenue sources to communes, it must be based on expenditure tasks, revenue capacity from various sources of the state budget within the locality; maximum decentralization of local revenue sources should be ensured, guaranteeing that communes with balanced revenue can meet their regular expenditure tasks, communes with relatively good revenue have a portion reserved for development investment, minimizing supplementation from higher-level budgets, increasing the number of communes capable of self-balancing their budgets, and gradually reducing the number of communes requiring supplementary balancing from higher-level budgets.

2.2. Expenditure of the commune budget includes: development investment expenditure and recurrent expenditure. The allocation of expenditure tasks to the commune budget must be based on the economic and social management hierarchy, ensuring national defense and security, state policies and systems regarding the operations of state agencies, the Communist Party of Vietnam, and political-social organizations; while also being consistent with the level and capability of commune-level administration.

2.3. The commune budget expenditure estimate shall allocate contingency reserves equal to 2% to 5% of total expenditure for disaster prevention and mitigation, fire control, important social order and safety tasks, and urgent tasks outside the budget estimate. The Commune People's Council decides on the use of the commune budget reserve and reports periodically every three months to the Chairman and Vice-Chairman of the People's Council and reports to the Commune People's Council at the nearest session.

2.4. The commune budget balance must adhere to the principle that expenditure does not exceed prescribed revenue. All forms of borrowing or misappropriation of funds to balance the commune budget are strictly prohibited.

2.5. The commune budget is established and managed by the Commune People's Council, decided upon and supervised by the Commune People's Council.

All revenue and expenditure of the commune budget must be managed through the State Treasury in accordance with the State Budget Law. For communes in mountainous areas and remote regions that have not yet had the conditions to directly manage revenue and expenditure through the State Treasury; the provincial People's Council (collectively referred to as the provincial level) shall establish appropriate management mechanisms and report to the Ministry of Finance.

Revenue and expenditure of the commune budget must be accounted for and settled according to the State Budget Item List and the accounting system of the State.

5. Other financial activities of communes as prescribed by law include: specialized public funds of communes; financial activities of communal services; village financial activities (revenues and expenditures from voluntary contributions collected by villages) and other financial activities as prescribed by law. Communes may open deposit accounts at the State Treasury to deposit funds not included in the commune budget, and the State Treasury manages these deposits according to the deposit regulations. Revenues and expenditures of other financial activities of communes must be clearly and transparently recorded according to each type of activity.

6. The Commune People's Council organizes unified management of financial activities related to communal public assets, state assets, and other assets in accordance with the prescribed regulations.

PART II

Sources of revenue, expenditure tasks, and procedures for managing the commune budget

I. Sources of revenue, expenditure tasks of the commune budget:

1. Sources of revenue of the commune budget: The sources of revenue of the commune budget are determined by the Provincial People's Council within the scope of local government budget revenue.

1.1. Revenues that the commune budget enjoys one hundred percent (100%): These are revenues allocated entirely for the commune to ensure financial autonomy in fulfilling regular expenditure tasks and investment. Based on the scale of revenue sources, the economic and social administrative tiering system, and the principle of ensuring maximum local balance for regular expenditure tasks, when allocating revenue sources, the Provincial People's Council shall consider allocating 100% of the following revenues to the commune budget:

a) Fees and charges collected into the commune budget as prescribed..

b) Revenues from communal public service activities, the portion submitted to the state budget according to the prescribed regulations;

c) Bidding revenues and lease revenues from communal public land funds and other communal assets' benefits managed by the commune, as stipulated by law;

d) Revenue from contributions by organizations and individuals, including contributions mandated by law, voluntary contributions for infrastructure investment decided by the Commune People's Council to be included in the commune budget management, and other voluntary contributions;

đ) Non-reimbursable aid from organizations and individuals outside the country directly to the commune budget according to prescribed regulations;

e) Surplus of the commune budget from the previous year;

g) Other revenues of the commune budget as prescribed by law.

1.2. Revenues divided proportionally between the commune budget and higher-level budgets:

a) As prescribed by the State Budget Law, including:

Land transfer tax;

Property tax;

Business registration fee collected from individuals and households;

Agricultural land use tax collected from households;

Stamp duty on property transactions.

For the above revenues, the commune budget shall receive at least 70%. Based on the commune's revenue sources and expenditure tasks, the Provincial People's Council may decide that the commune budget receives a higher percentage, up to a maximum of 100%.

b) In addition to the revenues divided proportionally as specified in point a, clause 1.2 above, the commune budget may also be supplemented with additional revenue sources divided after the aforementioned taxes and fees have been fully allocated to the commune and the commune budget has received 100% of its revenues but still cannot balance its expenditure tasks.

1.3. Supplementary revenues from higher-level budgets to the commune budget:

Supplementary revenues from higher-level budgets to the commune budget include:

a) Supplementary revenues to balance the budget, which is the difference between the allocated expenditure budget and the revenue budget from allocated sources (100% revenues and revenues divided proportionally). This supplementary balancing amount is determined from the first year of the budget stability period and is allocated stably for 3 to 5 years.

b) Targeted supplementary revenues are annual supplements to support the commune in implementing specific tasks.

1.4. Apart from the revenues mentioned in clauses 1.1, 1.2, and 1.3, the commune authority shall not impose any revenues contrary to the provisions of the law.

2. Expenditure tasks of the commune budget:

The commune budget expenditures include development investment and regular expenditures. The Provincial People's Council decides on the allocation of expenditure tasks to the commune budget. Based on the national economic and social administrative tiering system, policies and regulations regarding the operations of state agencies, the Communist Party of Vietnam, political-social organizations, and the commune's socio-economic development tasks, when allocating expenditure tasks to the commune budget, the Provincial People's Council shall consider assigning the commune budget to undertake the following expenditure tasks:

2.1. Development investment expenditures include:        

a) Investment expenditures for constructing economic and social infrastructure projects without the ability to recover capital, as tiered by the province.

b) Investment expenditures for constructing economic and social infrastructure projects of the commune from mobilized contributions of organizations and individuals for each specific project, as stipulated by law, decided by the Commune People's Council to be included in the commune budget management.

c) Other development investment expenditures as prescribed by law.

2.2. Regular expenditures:

aa) Expenditures for the operation of state agencies at the commune level:

Salaries and wages for commune-level cadres and civil servants;

Living expenses for representatives of the People's Council;

Other allowances as prescribed by the state;

Travel expenses;

Expenditures for office activities, such as electricity, water, office supplies, postal fees, telephone, conference fees, reception and ceremonial expenses;

Expenditures for regular maintenance and repair of offices and working equipment;

Other expenditures as prescribed by regulations.

b) Operating expenses of the Communist Party of Vietnam's agency at the commune level.

c) Operating expenses of political-social organizations at the commune level (Vietnam Fatherland Front, Ho Chi Minh Youth Union, Vietnam Veterans Association, Vietnam Women's Union, Vietnam Farmers' Union) after deducting income according to their charters and other income (if any).

d) Social insurance and health insurance payments for commune cadres and other eligible groups as prescribed by regulations.

đ) Expenditures for self-defense militia and social order security work:

Training expenditures for self-defense militia, allowances for mobilizing self-defense militia, and other expenditures related to self-defense militia under the commune budget as prescribed by the Militia Law;

Expenditures for registering military service and other conscription-related work as prescribed by law;

Expenditures for propaganda, mobilization, and organizing social order and security campaigns within the commune;

Other expenditures as prescribed by regulations.  

e) Expenditures for social work and cultural, information, sports activities managed by the commune:

Monthly allowances for retired commune cadres as prescribed (excluding monthly allowances for retired commune cadres and one-time retirement allowances for commune cadres who retired after January 1, 1998, paid by the social insurance organization); expenditures for visiting policy families; social relief and other social work;

Expenditures for cultural, information, sports activities, and radio broadcasting managed by the commune.

g) Educational expenditures: Support for supplementary education classes, nursery school subsidies, kindergarten subsidies, including subsidies for kindergarten teachers and caregivers managed by the commune (for wards, the upper-level budget covers these costs).

h) Expenditure on public health services: Support for regular expenditure and procurement of equipment necessary for medical examination and treatment at commune health stations.

i) Expenditure on repair and improvement of welfare facilities and infrastructure projects under communal management such as schools, health stations, kindergartens, preschool classes, cultural houses, libraries, memorials, sports facilities, bridges, roads, public water supply and drainage systems, etc.; specifically, for towns, there is also the responsibility to fund the repair and improvement of sidewalks, town streets, street lighting, parks, green spaces, etc. (for wards, these expenses are covered by higher-level budgets).

Encourage and support the development of economic services such as agricultural extension, fisheries extension, forestry extension according to prescribed regulations.

Other regular expenditures of communes as stipulated by law.

2.3. Based on national standards, quotas, and criteria, the Provincial People's Council shall specify the level of regular expenditure for each task in accordance with the specific conditions and budgetary capacity of the local area.

II. Procedures for managing commune budgets:

1. Preparation of Commune Budget Estimates:

1.1. Annually, based on guidelines from higher-level People's Committees, the Commune People's Committee prepares the next year's budget estimate (using forms attached as Appendices 1 to 5 to this Circular) to be submitted to the Commune People's Council for decision.

1.2. Basis for preparing commune budget estimates:

Tasks related to socio-economic development, ensuring national defense and security, and social order and safety at the commune level;

Policies, systems for state budget revenue collection, mechanisms for revenue distribution and commune budget expenditure responsibilities, and revenue sharing ratios as prescribed by the Provincial People's Council;

Standards, criteria, and quotas for budget expenditure as prescribed by the Government, Prime Minister, Ministry of Finance, and the Provincial People's Council;

Audit results of commune budget estimates announced by the County People's Committee;

Implementation status of current and previous years' commune budget estimates.

1.3. Procedure for preparing commune budget estimates:

a) The Commune Finance Office, in collaboration with the tax authority or the commune tax collection team (if available), calculates state budget revenues within the scope delegated to commune management.

b) Departments and organizations under the Commune People's Committee prepare their own budget estimates based on assigned functions and duties, and established expenditure standards and quotas.

c) The Commune Finance Office compiles the budget revenue and expenditure estimates and balance sheet for submission to the Commune People's Committee for reporting to the Chairman and Vice Chairmen of the Commune People's Council for review and forwarding to the County People's Committee and County Financial Department. The time frame for submitting commune budget estimates is determined by the Provincial People's Committee.

d) For the first year of the new budget stabilization period, the County Financial Department works with the Commune People's Committee to adjust the budget revenue and expenditure balance for the new stabilization period based on the overall budget allocation capacity of the locality. For subsequent years during the stabilization period, the County Financial Department will only conduct meetings with the Commune People's Committee regarding budget estimates upon request from the Commune People's Committee.

1.4. Decision on Commune Budget Estimates: After receiving the assignment of budget revenue and expenditure tasks from the County People's Committee, the Commune People's Committee finalizes the commune budget estimates and budget allocation plan for submission to the Commune People's Council for approval. Once the commune budget estimates are approved by the Commune People's Council, the Commune People's Committee reports to the County People's Committee and County Financial Department, and publicly announces the commune budget estimates to the people according to the financial transparency regulations for state budgets.

1.5. Annual adjustment of commune budget estimates (if required) in cases where higher-level People's Committees require adjustments to ensure alignment with overall guidance or significant changes in revenue sources and expenditure tasks.

The Commune People's Committee prepares adjusted budget estimates for submission to the Commune People's Council for approval and reports to the County People's Committee.

2. Execution of Commune Budget Estimates:

2.1. Based on the annual budget estimates and budget allocation plans approved by the Commune People's Council, the Commune People's Committee details the budget expenditure estimates according to the State Budget Item Schedule (using forms attached as Appendix 6 to this Circular) and sends them to the State Treasury for payment processing and control.

2.2. Based on the annual estimates and revenue and expenditure capabilities for each quarter, the Commune People's Committee prepares quarterly revenue and expenditure estimates (broken down by month) and sends them to the State Treasury. For communes with primary revenue sources that vary seasonally, the Commune People's Committee requests higher-level financial authorities to implement supplementary funding adjustments in the allocated budget estimates (if applicable) to align with project progress.

2.3. The Chairman of the Commune People's Committee (or authorized representative) is responsible for the commune's budget revenue and expenditure accounts.

2.4. Each commune maintains a cash reserve for small-scale expenditures. The cash reserve limit is set by the County State Treasury for different types of communes. For remote communes far from the State Treasury with difficult travel conditions, unable to directly deposit budget revenues, the cash reserve limit is set appropriately.

2.5. Organization of State Budget Revenue Collection:

a) The Commune Finance Office is responsible for coordinating with the tax authority to ensure timely and full revenue collection.

b) Units and individuals obligated to pay taxes, based on revenue notices from the tax authority or the Commune Finance Office, prepare payment vouchers (by bank transfer or cash) to be deposited directly into the State Treasury.

c) In cases where entities required to pay taxes cannot directly deposit funds into the State Treasury as prescribed, then:

For tax collection tasks, the tax authority collects the funds, issues payment vouchers, and deposits them into the State Treasury. If the tax authority delegates collection to the Commune Finance Office, it follows the above process and receives agency collection fees as prescribed.

For revenues under the collection tasks of the Village Finance Board, the Village Finance Board shall collect such revenues, then issue a payment receipt and deposit the money into the State Treasury or into the village budget fund for disbursement according to the prescribed regulations if the village is located in mountainous areas, remote regions, or far-flung areas without regular transactions with the State Treasury.

d) It is strictly prohibited to collect without a receipt or to keep collections outside the books; when collecting, a receipt must be handed over to the payer. The Tax Authority and the District Finance Office have the responsibility to provide complete and timely receipts to the Village Finance Board to implement the collection and payment of state revenue. Periodically, the Village Finance Board reports on the use and settlement of receipts provided.

đ) In cases where the competent authority decides to refund a portion of the village budget revenue, the State Treasury will confirm the amount collected from the village budget of payers who directly deposited or transferred funds into the State Treasury; for payers through collection agencies, the collection agency will confirm this for the Village Finance Board to serve as the basis for refunds.

e) The rotation of collection documents shall be carried out as follows:

For revenues that the village budget enjoys 100%, the State Treasury will transfer one copy of the collection document to the Village Finance Board.

For revenues shared with higher-level budgets, the State Treasury will prepare a list of village budget revenues subject to sharing (according to Appendix 14 attached hereto) and send it to the Village Finance Board.

g) For additional revenues from the district budget to the village budget, the District Finance Office will base on the supplementary budget allocated to each village, the quarterly revenue and expenditure budget of the villages, and the district budget's balancing capacity, announce the quarterly supplementary amount (divided by month) to allow the village to proactively manage its budget. The District Finance Office will issue supplementary amounts to the village (by Payment Order) on a monthly basis.

2.6. Organization of implementing budget expenditures:

a) Responsibilities of agencies and individuals in managing village budget expenditures:

(1) Organizations and units under the village:

Expenditure must be within the approved budget, in accordance with regulations, standards, quotas, purposes, targets, and must be economical and effective.

Prepare quarterly budget usage plans (divided by month) and submit them to the Village Finance Board. When there is a need for expenditure, they must follow procedures to request the Village Finance Board to withdraw funds from the State Treasury or the village fund for payment.

Adhere to legal provisions on accounting, statistics, and settlement of budget usage with the Village Finance Board, and publicly disclose financial income and expenditure results of their organization or unit.

(2) Village Finance Board:

Review the need for budget usage by organizations and units.

Allocate resources according to the annual and quarterly budgets to meet expenditure needs; in cases where expenditure exceeds revenue in a quarter, measures should be taken to request higher authorities to increase supplementary funding progress or temporarily rearrange expenditure needs to align with revenue sources, following the principle of ensuring timely salary payments and full salary characteristics.

Supervise the implementation of budget expenditures and the use of assets by organizations and units using the budget, promptly identify and report violations of regulations, standards, and quotas to the Chairman of the People's Committee of the village for timely corrective actions.

(3) Chairman of the People's Committee of the village or authorized person deciding on expenditures:

Decisions on expenditures must comply with regulations, standards, and expenditure limits within the approved budget, and the decision-maker must bear responsibility for their decisions; if expenditures are incorrect, they must compensate the public treasury and may face disciplinary action, administrative penalties, or criminal prosecution depending on the nature and severity of the violation.

b) Principles of budget expenditures:

Expenditures must ensure the following conditions:

They are recorded in the approved budget, except in cases where the budget and budget allocation have not been decided by the competent authority and expenditures are from increased revenue or budget reserves;

They comply with regulations, standards, and quotas;

They are decided by the Chairman of the People's Committee of the village or an authorized person.

c) Based on the annual expenditure budget, quarterly expenditure budget divided by month, and work progress, the Village Finance Board will process expenditure requests submitted to the Chairman of the village or an authorized person for approval and send them to the State Treasury at the transaction location along with necessary documents as required by law. Expenditures of the village budget are settled by a Budget Expenditure Order. On the Budget Expenditure Order, specific and detailed chapters, types, clauses, sections, sub-sections according to the National Budget Manual must be clearly stated, accompanied by a detailed expenditure voucher list (according to Appendix 15 attached hereto); for large expenditures, supporting documents must also be attached. If multiple chapters are paid in one transaction, an additional expenditure detail list (according to Appendix 16 attached hereto) must be prepared, clearly stating the order number, date of the Budget Expenditure Order, and the total amount on the Order.

In cases of cash payment, a Cash Budget Expenditure Order is used. The State Treasury will check and, if conditions are met, proceed with the payment to the customer or user.

In exceptional circumstances, such as advance travel expenses, advance payments to customers or contractors according to contracts, conference preparation, hospitality, small purchases, etc., temporary advances can be made for expenditures. In these cases, only the total advance amount needed is noted on the Budget Expenditure Order. When settling the advance, valid vouchers must be provided, and the Village Finance Board must prepare an expenditure voucher list (according to Appendix 15 attached hereto) and an Advance Payment Settlement Request Form (according to Appendix 17 attached hereto) to be sent to the State Treasury at the transaction location to process the advance to actual expenditure.

Payments from the village budget through the State Treasury to entities with accounts at the State Treasury or banks must be made by bank transfer (except for small payments which may be made in cash). When making payments by bank transfer, a Bank Transfer Budget Expenditure Order is used.

For expenditures from revenues retained at the commune, the Commune Finance Board shall cooperate with the State Treasury to regularly process accounting entries for income and expenditure into the commune budget; when processing accounting entries for income and expenditure, they must be accompanied by a detailed list of revenue vouchers and a detailed list of expenditure vouchers in accordance with the prescribed regulations.

d) Regular expenses:

(1) Priority should be given to paying salaries and allowances to commune civil servants; strictly prohibit arrears in salaries and allowances.

(2) Other regular expenses must be based on the annual budget estimate, the volume of work performed, and the financial capacity of the commune budget at the time of expenditure to ensure appropriate spending.

đ) Investment and development expenses:

(1) The management of basic construction investment capital of the commune budget must be fully implemented in accordance with the State's regulations on investment management and basic construction, and the provincial delegation; the issuance, payment, and settlement of basic construction investment capital of the commune budget must comply with the regulations of the Ministry of Finance.

(2) For projects funded by voluntary contributions, in addition to general provisions, it is necessary to ensure:

Maintaining books to record and reflect all monetary contributions, labor days, and materials contributed by the people in a timely manner.

During construction, acceptance, and payment, there must be supervision by a project monitoring board elected by the people.

The results of investment and project settlement must be publicly announced to the people.

(3) Undertaking basic construction tasks must ensure compliance with the budget estimates and financial sources according to the prescribed regulations; strictly prohibit arrears in basic construction and the occupation of funds in any form.

2.7. Inspection and Supervision of Commune Budget Activities:

a) The Commune People's Council supervises the implementation of income and expenditure of the commune budget.

b) Higher-level financial agencies regularly inspect and guide the management of the commune budget.

3. Accounting and Settlement of the Commune Budget:

3.1. The Commune Finance Board is responsible for implementing accounting and settlement of the commune budget according to the National Budget Classification and the current commune budget accounting system; implementing reporting and settlement systems as prescribed. The State Treasury where transactions take place shall perform accounting for income and expenditure of the commune budget according to regulations; monthly and quarterly reports on the implementation of income and expenditure of the commune budget and the balance of the commune budget fund shall be sent to the Commune People's Committee; and other special reports as required by the Commune People's Committee.

3.2. The deadline for adjusting the commune budget settlement ends on January 31 of the following year.

3.3. To implement the annual closing and settlement procedures, the Commune Finance Board shall undertake the following actions:

a) In December, review all income and expenditure items according to the budget, take measures to collect all receivables into the budget in full, and promptly address expenditure needs according to the budget. If there is a possibility of revenue shortfall, proactively adjust expenditure items to ensure budget balance.

b) Coordinate with the County State Treasury where transactions take place to reconcile all income and expenditure items of the commune budget for the year, ensuring complete and accurate accounting of income and expenditure according to the National Budget Classification, and rechecking the distribution ratio between levels of budget as prescribed.

c) For temporary receipts, temporary deposits, and temporary loans (if any), consider handling or returning them; if not handled, proceed with the procedure to transfer them to the next year.

d) Income and expenditure items occurring at the end of the year shall be processed according to the following principles:

Revenue must be submitted no later than the end of working hours on December 31; if submitted after this deadline, it shall be recorded as revenue for the next year's budget.

Expenditure items allocated in the annual budget can only be spent within the fiscal year; unspent items in the budget by December 31 cannot be carried over to the next year unless necessary and approved by the People's Committee, in which case the accounting and settlement shall be as follows: if executed during the adjustment period, use the previous year's balance to cover the expenditure and settle it in the previous year's budget; if approved for execution in the next year, proceed with the procedure to transfer the source to the next year for continued expenditure and settle it in the next year's budget.   

3.4. Annual Settlement of the Commune Budget:

a) The Commune Finance Board shall prepare the annual report on the settlement of income and expenditure of the commune budget (forms attached as Appendices 7 to 13 of this Circular) for submission to the Commune People's Committee for consideration and approval by the Commune People's Council, and simultaneously send it to the County Finance Department for consolidation. The deadline for submitting the annual settlement report to the County Finance Department is determined by the Provincial People's Committee.

b) The settlement of expenditure of the commune budget shall not exceed the settlement of income of the commune budget. The surplus of the commune budget is the difference between actual income and actual expenditure. The entire surplus of the previous year (if any) shall be transferred into the next year's budget income.

c) After approval by the Commune People's Council, the settlement report shall be prepared in five copies to be sent to the Commune People's Council, the Commune People's Committee, the County Finance Department, the State Treasury where the commune conducts business (to process the recording of surplus budget income), kept by the Commune Finance Board, and publicly announced to the commune residents.

d) The County Finance Department is responsible for reviewing the settlement report on income and expenditure of the commune budget; in case of errors, report to the County People's Committee to request the Commune People's Council to make adjustments.         

PART III

Scope and Organization of Management of Other Financial Activities of the Commune

1. Special Public Funds of the Commune:

The special public funds of the commune specified in this Circular are financial funds established according to State regulations (defense and security fund, gratitude fund, etc.) and voluntary contributions from the people collected by villages and approved by the Commune People's Council but not included in the commune budget according to the prescribed regulations. The content, level, and methods of managing income and expenditure of these funds shall be carried out in accordance with State regulations for each fund and the regulations of the Commune People's Council.

The Financial Office of the Commune has the duty to assist the People's Committee of the Commune in managing the funds mentioned above (implementing collection and expenditure; organizing accounting and settlement for each fund separately; implementing reporting systems as prescribed,...). Unspent funds from the year are carried over to the next year.

The People's Committee of the Commune must report annually on the results of each fund's activities to the People's Council of the Commune, the People's Committee of the District, the District Finance Department, and publicly inform the people.

2. Financial activities of communal public services:

Financial activities of communal public services include: activities of health stations, kindergartens, cultural information activities, sports, management of boats, markets, lakes, ponds, land, natural resources, wharfs,... directly organized and managed by the People's Committee of the Commune according to prescribed regulations.

All financial activities of communal public services are uniformly managed under the principle:

a) The People's Committee of the Commune assigns each department, organization of the commune to directly implement specific public services. These departments and organizations must prepare annual financial plans, submit them to the People's Committee of the Commune for approval. In the financial plan, all revenue and expenditure items, amounts to be paid to the commune budget or support from the commune budget (if applicable) must be calculated according to prescribed regulations. The People's Committee of the Commune is responsible for compiling and reporting annual financial plans and financial results of each public service activity to the People's Council of the Commune. The People's Council of the Commune supervises these public service activities.

b) The Financial Office of the Commune assists the People's Committee of the Commune in managing the financial activities of communal public services (guiding units assigned to implement public services in organizing accounting and settlement of income and expenditure; implementing appropriate financial reporting systems for each activity, regularly and spot-checking the financial situation of these activities,...).

3. Financial activities of village groups:

Contributions voluntarily made by the people for specific purposes serving the common interests of the village community are directly mobilized by the village group and not included in the commune budget. Mobilization can only be carried out after reaching a consensus among the people regarding the policy, level of mobilization, and must be reported to the People's Committee of the Commune. The village group must appoint someone to keep detailed records of all revenues and expenditures in ledgers and publicly disclose the results of mobilization and the use of these financial resources to the people. The village group only collects and spends money for specific tasks. If the collected funds are not used up, the village group may entrust the commune to deposit the funds into the commune's account at the State Treasury. The Financial Office of the Commune has the responsibility to assist the People's Committee of the Commune in guiding and inspecting (when necessary) the financial activities of village groups.

4. Other financial activities of the commune:

4.1. Financial activities of Party organizations and mass organizations are managed according to the charter of each organization, not included in the commune budget, and not part of other financial activities of the People's Committee of the Commune. Party organizations and mass organizations at the commune level must appoint someone to keep detailed records of each revenue and expenditure item; they organize their own collection and expenditure and implement financial reporting and disclosure systems according to the regulations of each organization.

4.2. Collection and expenditure on behalf of others: includes revenues and expenditures within the responsibilities of other organizations and agencies that entrust the commune to collect and expend on their behalf (school fees, contributions to social insurance and health insurance funds,...). The Financial Office of the Commune assists the People's Committee of the Commune in implementing collections and expenditures on behalf of others according to current regulations, without misusing such collections and expenditures for unintended purposes, and must maintain separate and detailed records for each collection and expenditure on behalf of others.

PART IV

Implementation

1. Based on the provisions of this Circular, the People's Committees of provinces and centrally-administered cities are responsible for providing detailed guidance suitable to the specific circumstances of each locality, while directing provincial finance agencies, local authorities, and district finance agencies to strengthen supervision, inspection, and monitoring of the management of the commune budget and other financial activities of communes, towns, and wards; promptly resolving and handling any issues or violations arising during implementation by the communes.

2. People's Committees at all levels should have concrete plans to gradually strengthen the Financial Offices of the communes so that the Financial Offices of the communes can effectively perform their function of assisting the People's Committees of the communes in managing the commune budget and other financial activities of the communes according to prescribed regulations. The positions and number of staff in the Financial Offices of the communes shall be based on the workload, scale of revenue and expenditure, and staffing norms prescribed by the Government.

2.1. The Financial Office of the Commune consists of:

a) The Head of the Office is a member of the People's Committee responsible for financial work, with the duty to assist the Chairman of the People's Committee of the Commune in organizing the implementation of financial management of the commune budget and other financial activities of  the commune.

b) The Accounting Officer must have a minimum of a college-level education in finance and accounting; in particularly difficult mountainous areas, a short-term specialized training in finance and accounting is required, but there must be a plan to achieve a college-level education by 2005. The Accounting Officer is responsible for assisting the Head of the Financial Office in managing the commune's budget revenue and expenditure and other financial activities; performing accounting and settlement work for the commune's budget and funds. For large-scale communes with complex management, the Chairman of the People's Committee of the District may allow the commune to hire an additional finance and accounting officer under the current labor contract system.

c) The Cashier is responsible for managing the commune's cash fund (for small-scale communes with simple revenue and expenditure, a person can be appointed concurrently, but cannot be the commune's accountant).

2.2. The People's Committee of the Province must have a plan to ensure sufficient trained personnel according to standards for managing commune finances and budgets from now until 2005, while regularly organizing training and upgrading commune staff to ensure adequate capacity for financial and budget management as stipulated by the State Budget Law. The selection and replacement of staff for each position in the Financial Office of the Commune shall be carried out according to national regulations.

3. This Circular replaces Circular No. 118/2000/TT-BTC dated December 22, 2000 of the Ministry of Finance on management of commune budgets and other financial activities at communes, wards, and towns, and shall take effect from the 2004 budget year. Previous financial management regulations and commune budgets that conflict with the provisions of this Circular shall cease to be effective.

4. People's Committees and financial agencies at all levels are responsible for implementing this Circular. Any difficulties or obstacles encountered during implementation should be reported to the Ministry of Finance for prompt resolution./.