Circular No. 65/2001/TT-BTC guiding the handling of results from the comprehensive asset inventory and revaluation of state-owned enterprises' assets at 00:00 on January 1, 2000.

CIRCULAR

Guidelines for handling the results of comprehensive asset inventory and revaluation of state-owned enterprises' assets at 00:00 on January 1, 2000

Implementing Directive No. 12/2001/CT-TTg dated May 23, 2001 of the Prime Minister regarding the handling of the results of comprehensive asset inventory and revaluation of state-owned enterprises' assets at 00:00 on January 1, 2000, the Ministry of Finance provides specific guidelines as follows:

1. Regarding the handling of excess and shortage assets discovered during inventory

When excess or shortage assets are found compared to accounting records, the enterprise must analyze and clarify the reasons for the excess or shortage; determine the level of responsibility for compensation by organizations or individuals for missing assets along with administrative measures according to current regulations. In the case of excess assets where the cause cannot be determined and the owner cannot be identified, they shall be recorded as increased assets based on their value at the time of inventory and increase the business's operating capital (state-owned).

2. For discrepancies arising from asset revaluation

2.1. For discrepancies arising from the revaluation of enterprise assets (including fixed assets, depreciated and deteriorated assets), the competent authority shall review the results of the inventory and revaluation of enterprise assets at the time of inventory 00:00 on January 1, 2000, in accordance with the guidance provided in Inventory Plan No. 04 KK/TW dated October 22, 1999, Circular No. 09/1999/TT-KKTW dated November 24, 1999, and other guiding documents of the Central Steering Committee for Inventory. The competent authority shall decide to increase or decrease state capital in the enterprise corresponding to the revalued asset value.

2.2. Assets of enterprises funded by ODA loans:

In cases where enterprises do not receive funds in cash but receive equipment, machinery, or completed construction projects with values differing from market prices at the time of inventory, requiring a reassessment of asset values and corresponding adjustments, the enterprise (including both central and local enterprises) shall prepare a proposal accompanied by relevant documentation and submit it to the Ministry of Finance. After coordinating with relevant agencies to review the data, the Ministry of Finance will decide on the adjustment of capital for the enterprise within its authority. If the adjustment exceeds its authority, the Ministry of Finance will report to the Prime Minister for decision.

2.3. Procedures and authority for increasing or decreasing capital:

Enterprises that have discrepancies arising from the revaluation of asset values need to process and adjust the corresponding capital increases or decreases by submitting relevant documentation to the competent authority for review and issuance of a decision. The documentation and authority are as follows:

2.3.1- Documentation and materials:

+ A proposal from the enterprise detailing the basis for revaluing asset values; explanations regarding assets funded by ODA loans;

+ A report on the results of the inventory and revaluation of asset values by the enterprise's inventory committee, consistent with reports submitted to higher-level authorities and the Central Steering Committee for Inventory;

+ A verification record from the competent authority or higher-level management agency (if applicable). In the case of assets funded by ODA loans, a verification record is mandatory;

+ A document from the higher-level management authority proposing the handling of the inventory results and revaluation of asset values of the enterprise.

2.3.2- Authority for reviewing and issuing decisions to increase or decrease capital for enterprises:

a) For state-owned enterprises directly under central ministries and sectors, and member enterprises of state-owned corporations (hereinafter referred to as central enterprises); all cases involving the revaluation of assets funded by ODA loans (including both central and local enterprises), the enterprise shall submit a document with attached documentation and materials to the Ministry of Finance. The Ministry of Finance, in conjunction with the sectoral ministry, state-owned corporation, and related agencies, will review the data and issue a decision to increase or decrease capital for the enterprise. If the adjustment exceeds its authority, the Ministry of Finance will report to the Prime Minister for decision.

b) For state-owned enterprises managed by localities, excluding cases involving the revaluation of assets funded by ODA loans (hereinafter referred to as local enterprises), the enterprise shall submit a document with attached documentation and materials to the Department of Finance and Price Control of the provincial or centrally-administered city. The Department of Finance and Price Control, in conjunction with the sectoral department and related agencies, will review the data and report to the People's Committee of the province or centrally-administered city for issuance of a decision to increase or decrease capital for the enterprise.

3. For discrepancies arising from asset liquidation

3.1. Enterprises must take active measures to put into use or sell off substandard, deteriorated, outdated, and slow-moving assets. For substandard, deteriorated, and outdated assets that cannot be used anymore, the enterprise must liquidate them. For the complete production line of the enterprise when liquidating or selling, approval from the establishment decision-making body is required.

When selling or liquidating assets, the enterprise must establish an evaluation committee to assess the technical condition and appraise the asset value; if selling, a public auction must be organized and announced. If the asset is liquidated through dismantling or destruction, a liquidation committee must be established by the General Director (Director) of the enterprise; during implementation, environmental safety must be ensured.

3.2. The difference between the proceeds from the sale or liquidation of assets and the remaining book value, along with liquidation or sale costs (if any), shall be accounted for in the enterprise's operating results.

3.3. In case the enterprise liquidates assets at a loss and is unable to cover it itself, the enterprise shall submit a report in writing to the competent authority for consideration and handling according to Clause 3.3.2 below to reduce capital for the enterprise. The maximum reduction shall not exceed the remaining value of the liquidated asset as recorded in the accounting books. The dossier, documents, and authority for consideration and handling are as follows:

3.3.1- Dossier and documents:

+ A request from the enterprise for a reduction in capital, explaining the loss from the liquidation of assets and the difficulties faced by the enterprise that prevent it from covering the loss on its own;

+ Dossier on the liquidation of assets, obsolete materials, outdated technology, slow-moving inventory, settlement of losses from asset liquidation, and annual settlement reports related thereto;

+ Report on the revaluation of the asset value by the enterprise's inspection committee, consistent with the report submitted to the superior agency and the Central Inspection Committee;

+ A document from the superior management agency proposing to handle the loss from asset liquidation and requesting a reduction in capital for the enterprise.

3.3.2- Authority for assessment and decision-making on reducing capital for the enterprise:

+ For central enterprises, they must submit a document along with the dossier and report to the Ministry of Finance for consideration and decision on reducing capital for the enterprise;

+ For local enterprises, they must submit a document along with the dossier and report to the Provincial Department of Finance and Prices. The Provincial Department of Finance and Prices will review the data in the report and submit it to the People's Committee of the province or centrally-administered city for a decision on reducing capital for the enterprise.

4- Regarding outstanding debts and difficult-to-collect debts

4.1- For receivables that cannot be recovered:

For receivables that cannot be recovered, the enterprise must prepare a dossier clearly identifying the extent, cause, responsibility, and measures for handling or submitting to the competent authority for handling according to the following principles:

4.1.1. If the outstanding receivable is due to the fault of an individual or organization, that individual or organization must compensate and be handled according to the law. The Board of Directors, General Director, or Director (for enterprises without a Board of Directors) must decide on the amount of compensation and bear responsibility for their decision. The difference between the receivable amount and the compensation paid by the responsible party will be handled according to Clauses 4.1.2 and 4.1.3 below.

4.1.2. If it is not due to the fault of an individual or organization, the enterprise must first cover the loss using the bad debt reserve, the financial reserve fund of the enterprise. If this fund is insufficient, the shortfall will be recorded as part of the enterprise's annual operating expenses, but not exceeding five years.

4.1.3. If beyond the period specified in Clause 4.1.2, the enterprise incurs a loss and is unable to cover the difficult-to-collect receivable, it must submit a detailed explanation regarding the difficult-to-collect receivables: causes; difficulties faced by the enterprise in covering the difficult-to-collect receivable, accompanied by relevant documents and reporting to the Ministry of Finance for financial handling of the enterprise based on the nature and severity of each difficult-to-collect receivable; if beyond the Ministry of Finance's authority, it will be reported to the Prime Minister for decision.

4.2- For payable debts to the state budget:

For payable debts to the state budget including taxes and other payments to the state budget up to December 31, 1999, which the enterprise has used for investment in fixed assets according to approved projects and is now unable to pay, the enterprise must submit a detailed explanation along with the dossier and documents to the Ministry of Finance. At the same time, the enterprise must self-assess the reasons for the outstanding debt to prevent recurrence. The Ministry of Finance will consider each case to increase capital for the enterprise. The dossier, documents, and authority for consideration and decision are as follows:

4.2.1- Dossier and documents:

+ Report on the revaluation of the asset value by the enterprise's inspection committee, consistent with the report submitted to the superior agency and the Central Inspection Committee;

+ A request for support in investment capital from the enterprise's outstanding state budget debt, clearly stating:

- Total investment value according to the approved project;

- Construction cost, equipment purchase... value according to the completed settlement and handover for use;

- Sources of investment funds:

* State budget capital;

* Enterprise capital (development production and business fund, other business capital);

* Bank loans and other organizations and individuals;

* Occupied tax and other state budget payments (details by each payment item);

+ An expanded production and business investment project approved by the competent authority;

+ Settlement of construction investment approved according to current regulations;

+ Financial settlement, tax settlement of the years related to the outstanding state budget payments that the enterprise has occupied for investment;

+ Confirmation from the Provincial Tax Office about:

- Amount of tax and other state budget payments still owed before occupation for investment;

- Amount of tax and other state budget payments occupied for investment up to December 31, 1999;

+ A document from the superior management agency proposing to resolve the provision of investment capital support for the enterprise from the source of payable state budget debt.

4.2.2- Procedure, authority for assessment, decision-making, and implementation:

+ For central enterprises, they must submit the dossier and documents to the Ministry of Finance (Enterprise Finance Department) for consideration and resolution.

+ For local enterprises, they must submit the dossier and documents to the Provincial Department of Finance and Prices. The Provincial Department of Finance and Prices will compile the dossier for processing revenue and expenditure records of the state budget regarding the outstanding tax and other state budget payments of local enterprises, and submit it to the People's Committee of the province or centrally-administered city for consideration and provide comments in writing along with the enterprise's dossier sent to the Ministry of Finance for consideration and decision.

+ The Ministry of Finance will assess and consider supporting the enterprise's investment capital through revenue and expenditure records up to the amount of tax and other state budget payments that the enterprise has used for investment, after mobilizing all sources of the enterprise's capital in previous years until the end of 1999.

+ The Ministry of Finance will implement recording income and expenditure for central enterprises and enterprises with special consumption taxes; the recorded income, the Central Budget enjoys 100%;

+ The Provincial Department of Finance and Price will implement recording income and expenditure for local enterprises after obtaining the consent of the Ministry of Finance; the recorded income, the Local Budget enjoys 100%;

5- Accounting entries and adjustments

Based on each specific case handled by the enterprise and the decision of the competent authority, the enterprise shall record in the relevant accounting accounts in accordance with the prescribed accounting regulations. On this basis, adjust accounting work, simultaneously adjust the accounting books, prepare financial statements and balance sheets according to current regulations. If the decisions for handling are made before the final settlement report for the year 2000 is prepared, they shall be adjusted to the accounting books of the year 2000. In cases where the decisions for handling are made after the final settlement report for the year 2000 has been prepared, they shall be adjusted to the accounting books of the year 2001.

6- Implementation Organization

The Ministries, sectors, People's Committees of provinces and centrally governed cities, State-owned Holding Companies, and State-owned Enterprises, in accordance with their assigned functions and tasks, shall direct, guide, and urge timely implementation of Directive No. 12/2001/CT-TTg and this Circular.

The dossier (complete as stipulated above) shall be submitted to the Ministry of Finance (Enterprise Financial Department), Provincial Departments of Finance and Prices, no later than December 31, 2001. For cases involving the liquidation of substandard or deteriorated assets and materials that have stagnated in circulation, the submission deadline is December 31, 2002. Submissions beyond these deadlines will not be considered or resolved under the provisions of this Circular.

The People's Committees of provinces and centrally governed cities (led by the Provincial Departments of Finance) shall prepare comprehensive reports on the implementation of each item of Directive No. 12/2001/CT-TTg and this Circular, along with any difficulties encountered, existing issues, and recommendations for resolution, reporting in two stages on September 30, 2001, and December 31, 2001. In cases of asset sale or liquidation in 2002, reports shall be submitted on June 30, 2002, and December 31, 2002, to the Ministry of Finance (Enterprise Financial Department) for consolidation and reporting to the Prime Minister.

This Circular takes effect from the date Directive No. 12/2001/CT-TTg dated May 23, 2001, issued by the Prime Minister comes into force, applicable to the handling of inventory results and revaluation of the value of state-owned enterprises' assets at the time of 00:00 on January 1, 2000, pursuant to Decision No. 150/1999/QĐ-TTg dated July 8, 1999, issued by the Prime Minister.

Any difficulties encountered during implementation should be promptly reported to the Ministry of Finance by the Ministries, sectors, People's Committees of provinces and centrally governed cities, State-owned Holding Companies, and State-owned Enterprises for study and resolution./.