Circular No. 69/2013/TT-BTC guiding the financial management regime for Farmers Support Funds under the Vietnam Farmers' Union system

CIRCULAR

Guidelines on financial management for Farmers Support Funds

under the Vietnam Farmers' Association system

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Pursuant to the Decree No. 118/2008/NĐ-CP dated November 27, 2008 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance;

Pursuant to Decision No. 673/QĐ-TTg dated May 10, 2011 of the Government Prime Minister regarding the Vietnam Farmers' Association directly implementing and coordinating with the implementation of certain programs and projects to develop rural economy, culture, and society during the period from 2011 to 2020;

At the proposal of the Director of the Department of Banking Finance and Financial Institutions;

The Minister of Finance issues this Circular guiding the financial management regime for the Farmers Support Funds under the Vietnam Farmers' Association system.

Article 1. Scope of application

The objects subject to this Circular are Farmers Support Funds under the Vietnam Farmers' Association system (including the Central Farmers Support Fund, Provincial Farmers Support Fund, and District Farmers Support Fund) established according to Document No. 4035/KTTH dated July 26, 1995 on the establishment of the Vietnam Farmers Support Fund and Decision No. 673/QĐ-TTg dated May 10, 2011 of the Government Prime Minister regarding the Vietnam Farmers' Association directly implementing and coordinating with the implementation of certain programs and projects to develop rural economy, culture, and society during the period from 2011 to 2020.

Article 2. Principles of Financial Management

1. Farmers Support Funds operate without profit objectives, aiming to support and assist farmers' members in developing agricultural production and business activities in rural areas.

2. Farmers Support Funds have legal personality, possess seals, maintain separate balance sheets, and are allowed to open accounts at State Treasury, domestic commercial banks in accordance with current laws.

3. Farmers Support Funds are financially autonomous, bear responsibility for their operations before the law; implement capital preservation and development; compensate for costs and risks in operations in accordance with current laws and regulations set forth herein.

4. Management of capital, assets, income, and expenditures of Farmers Support Funds is under the direction and supervision of the Standing Committee of the Farmers' Association at the same level and the Standing Committee of the Vietnam Farmers' Association.

Article 3. Sources of Operating Capital

1. The operating capital of Farmers Support Funds is formed from the following sources:

a) Shareholder's equity:

- Capital provided by the state budget (for the Central Farmers Support Fund, from the central budget; for the Provincial and District Farmers Support Funds, from the provincial and district budgets);

- Capital raised and received from donations from organizations and individuals both domestically and internationally for the development of agriculture and rural areas;

- Annual supplementary capital.

b) Entrusted capital from the state and organizations both domestically and internationally for the development of agriculture and rural areas.

c) Other lawful sources of capital as prescribed by law.

2. Farmers Support Funds shall not mobilize capital or borrow funds through savings deposits, issuance of promissory notes, bills of exchange, bonds, or commercial loans from organizations and individuals as in the operations of credit institutions.

Article 4. Use of Capital

1. The operating capital of Farmers Support Funds is used to support and assist farmers' members in building and expanding economic models aimed at eradicating poverty and hunger; increasing production scale and producing goods, developing industries; contributing to the restructuring of the economy and the development of collective economic forms in rural areas; creating jobs, promoting the application of new technological and scientific advancements in agricultural production, exploiting regional potential and strengths to produce high-quality and efficient agricultural products and services.

2. Assistance to farmers' members is implemented in the form of interest-free loans with repayment (with limits and terms), only charging fees.

3. Farmers Support Funds are responsible for managing and using capital for its intended purpose, for the right beneficiaries, effectively, recovering all loaned assistance capital promptly and fully to ensure capital preservation and timely repayment to organizations and individuals who have funded the Farmers Support Funds.

4. Farmers Support Funds shall not use operating capital for monetary trading, stock investment, real estate business, financial investment, or other business activities.

5. The Standing Committee of the Central Vietnam Farmers' Association guides the mechanism for Farmers Support Funds to provide interest-free loans with repayment to farmers, clearly defining the target groups, borrowing conditions, terms, loan amounts, and repayment of borrowed capital.

Article 5. On Fee Collection

1. The Farmer Support Fund shall collect fees on the amount of assistance loans to cover necessary expenses for the operation of the Farmer Support Fund. The fee rate for assistance loans must ensure compensation for operational costs of the Farmer Support Fund, preservation of capital, and achievement of the goal of supporting farmers. The Farmer Support Fund shall not collect any additional fees other than those specified for assistance loans.

2. The Central Steering Committee of the Vietnam Farmers' Union shall issue a fee schedule for assistance loans for the Farmer Support Fund to uniformly implement.

Article 6. Investment and Purchase of Assets by the Fund

1. The Farmer Support Fund may invest in and purchase fixed assets and other assets serving the operations of the Farmer Support Fund. Investment and asset purchases for the operations of the Farmer Support Fund at each level shall be carried out by the Director of the Farmer Support Fund according to plans approved by the Steering Committee of the Farmers' Union at the same level and within the scope of the development investment fund's capital.

2. Procedures and formalities for investment construction, procurement, and repair of fixed assets shall be implemented in accordance with laws governing investment management and construction.

3. The Farmer Support Fund shall manage, utilize, depreciate, inventory, revalue, liquidate, and sell fixed assets in accordance with current laws applicable to enterprises.

Article 7. Establishment and Management of Risk Reserve Fund

1. The Farmer Support Fund may establish a risk reserve fund to compensate for losses caused by unforeseeable and irresistible factors arising during the provision of assistance loans to farmer members such as natural disasters (typhoons, floods, droughts), fires, epidemics, and other irresistible factors.

2. The annual amount for establishing the credit risk reserve fund shall be calculated at 0.9% of the outstanding loan balance as of December 31 each year.

3. The credit risk reserve fund shall be used to compensate for assistance loans to farmer members encountering risks due to unforeseeable and irresistible factors. At the end of the year, if the credit risk reserve fund is not fully utilized, the remaining balance shall be transferred to the following year.

4. The Central Steering Committee of the Vietnam Farmers' Union shall develop regulations for managing and using the credit risk reserve fund for the Farmer Support Fund to uniformly implement.

Article 8. Income of the Farmer Support Fund

1. The income of the Farmer Support Fund includes the following items:

a) Fees from assistance loans to farmer members;

b) Fees from entrusted lending services under entrustment contracts;

c) Interest income from deposits in the accounts of the Farmer Support Fund held at State Treasury, commercial banks where the Farmer Support Fund has opened accounts;

d) Other lawful income (if any) as prescribed by law.

2. The Farmer Support Fund is responsible for collecting all income accurately, completely, and promptly.

Article 9. Expenses of the Farmer Support Fund

1. Expenses for business activities:

a) Payment of interest or fees for mobilized and received donations from organizations and individuals both domestically and internationally (if any);

b) Expenditure for establishing the credit risk reserve fund as stipulated in Article 7 of this Circular;

c) Other business expenses.

2. Expenses for staff of the Farmer Support Fund:

a) Wages, social insurance, health insurance, and other deductions based on wages for employees of the Farmer Support Fund in accordance with current state regulations;

b) Allowances for staff assigned directly to manage and operate the Farmer Support Fund from the organizational structure of the Vietnam Farmers' Union at various levels. The maximum allowance shall not exceed 0.8 times the salary grade of the assigned staff;

c) Allowances for staff participating in directing, managing, and supervising the Farmer Support Fund in accordance with legal provisions (if any).

3. Administrative and Official Expenses.

a) Travel expenses for staff and employees of the Farmer Support Fund traveling domestically and internationally in accordance with state regulations for government agencies and public institutions;

b) Procurement of office supplies, stationery, documents, books, newspapers, and other materials;

c) Service payment fees;

d) Depreciation expenses for fixed assets in accordance with enterprise regulations; insurance expenses for assets; repair and maintenance expenses for assets; expenses for purchasing labor tools (for assets under the management of the Farmer Support Fund);

đ) Postal and telephone charges;

e) Rental expenses for assets and equipment serving the operations of the Farmer Support Fund;

g) Expenses for conferences, seminars, training, and education for Farmer Support Fund staff in accordance with state regulations for government agencies and public institutions. The Farmer Support Fund can provide support for food, accommodation, and travel expenses for delegates attending in accordance with state regulations;

h) Expenses for publicity, printing materials, transactions, foreign relations, and hospitality in accordance with legal provisions;

i) Expenses for inspection, supervision, and auditing activities related to the operations of the Farmer Support Fund;

k) Expenses for recovering overdue debts;

l) Support expenses for the activities of the Party organization and mass organizations of the Farmer Support Fund;

m) Support expenses for the activities of the Central Vietnam Farmers' Union and the farmer movement at various levels, with annual expenditures not exceeding 10% of the total income of the Farmer Support Fund;

n) Tax, fee, and charge payment expenses as prescribed by law;

o) Other expenses in compliance with legal provisions.

Article 10. Distribution of Revenue and Expenditure Surplus

1. The revenue and expenditure surplus of the Farmer Support Fund shall be determined as the total income minus the total expenses for the year.

2. The annual revenue and expenditure surplus of the Farmer Support Fund shall be distributed as follows:

a) Allocate 20% to supplement the development investment fund.

b) Allocate two funds: welfare fund and incentive fund, with a maximum amount equal to three months' salary of the Farmer Support Fund's staff during the year.

c) The remaining revenue and expenditure surplus after allocating to the development investment fund, welfare fund, and incentive fund shall be supplemented to the operational capital.

Article 11. Purpose of Funds

1. The development investment fund shall be used for purchasing assets to serve the activities of the Farmer Support Fund.

2. The Reward Fund:

a) The incentive fund shall be used for:

- Regular or special rewards for individuals or groups within the Farmer Support Fund who have innovative ideas improving technology or business processes that yield high efficiency;

- Rewards for individuals or groups inside or outside the Farmer Support Fund who effectively contribute to its activities.

b) The Standing Committee of the Vietnam Farmers' Union shall guide the expense limits for each recipient group so that the Farmer Support Fund can implement them.

3. The welfare fund shall be used for expenditures on sports, cultural, and public welfare activities for the collective of officers and employees of the Farmer Support Fund; regular and emergency hardship allowances for officers and employees of the Farmer Support Fund. The Director of the Farmer Support Fund shall coordinate with the Trade Union Executive Board to manage and utilize this fund.

Article 12. Accounting System

1. The Farmer Support Fund shall record economic transactions, maintain accounting books, record vouchers, and prepare financial reports in accordance with current laws and regulations of the Ministry of Finance.

2. The Farmer Support Fund shall be responsible for preparing and submitting quarterly and annual financial reports to the Standing Committees of the Farmers' Unions at all levels, the upper-level Farmer Support Fund, the financial authority, and the tax authority at the same level, including:

a) Balance Sheet;

b) Balance sheet report;

c) Income and expenditure report;

d) Financial statement explanation.

3. Deadline for submitting reports:

The deadline for submitting quarterly reports is no later than 30 days from the end of the quarter, and for annual reports, it is no later than 90 days from the end of the fiscal year.

Article 13. Audit and Financial Inspection

1. The annual financial report of the Central Farmer Support Fund shall be audited by the State Audit Agency.

2. Provincial and district-level Farmer Support Funds shall conduct audits of their financial reports according to management requirements and decisions made by the Standing Committees of the Farmers' Unions at the same level.

3. The Central Vietnam Farmers' Union and the Standing Committees of the Farmers' Unions at all levels shall be responsible for periodic or ad hoc inspections and supervision of the activities of the Farmer Support Fund, and for reviewing and approving the annual financial settlement of the Farmer Support Fund at the same level.

Article 14. Annual Financial Plan

1. The fiscal year of the Farmer Support Fund runs from January 1 to December 31 annually.

2. The Farmer Support Fund shall be responsible for developing an annual financial plan to submit to the Standing Committee of the Farmers' Union at the same level and to the financial authority at the same level for monitoring. The contents of the next year's financial plan include:

a) Plan for sources of capital and utilization of assistance capital for farmers;

b) Plan for revenue and expenditure.

Article 15. Implementation Organization

1. The Farmer Support Fund shall be accountable under the law for managing, using, and preserving state capital and assets managed by the Farmer Support Fund for lending to farmer members, subject to inspection by the Central Vietnam Farmers' Union, the Standing Committees of the Farmers' Unions at all levels, and the state financial authorities at all levels.

2. The Standing Committee of the Central Vietnam Farmers' Union shall be responsible for organizing the monitoring and inspection of the financial activities of the Farmer Support Fund to ensure that the use of the Farmer Support Fund's capital aligns with the union's objectives and policies.

3. Based on the guidance provided in this Circular and the state's financial system regulations, the Standing Committee of the Central Vietnam Farmers' Union shall issue specific guidelines for the Farmer Support Fund.

Article 16. Effective Date

1. This Circular shall take effect from July 15, 2013, and replace Circular No. 36/2002/TT-BTC dated April 22, 2002, issued by the Ministry of Finance regarding the guidelines for financial management regulations for the Farmer Support Fund under the Vietnam Farmers' Union system.

2. During the implementation process, if there are difficulties or obstacles, please reflect them to the Ministry of Finance for study and amendment./.