Circular No. 73-TC/TCDN guides the preparation, public disclosure, and inspection of financial reports and accounting audits for state-owned enterprises.

CIRCULAR

Regarding the guidance on establishing, publicly announcing, and inspecting financial reports,

auditing accounting for state-owned enterprises

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Implementing Decree No. 59/CP dated October 3, 1996 of the Government promulgating the "Regulations on Financial Management and Business Accounting for State-Owned Enterprises"; the Ministry of Finance stipulates and guides the work of preparing financial reports, publicly announcing financial reports, and annually inspecting accounting operations at state-owned enterprises as follows:

I. ESTABLISHING QUARTERLY AND ANNUAL FINANCIAL REPORTS FOR STATE-OWNED ENTERPRISES

1. Quarterly and annually, state-owned enterprises are responsible for preparing and submitting the system of financial reports issued together with Decision No. 1141 TC/QĐ-CĐKT dated November 1, 1995 of the Minister of Finance and other specific documents to suit the characteristics of each industry and field as agreed upon by the Ministry of Finance.

2. Prior to preparing annual financial reports, state-owned enterprises must perform the following tasks:

a. Closing accounting books, organizing asset inventory, materials, and capital at the time of preparing financial reports to accurately and fully determine the actual value of all assets of the enterprise, identify excess or missing assets compared to the figures recorded in the accounting books, ascertain the causes, responsibilities, and handle them according to the regulations on capital and asset management.

- Reviewing and reconciling each account receivable and payable, classifying overdue accounts receivable and payable or uncollectible accounts.

- The enterprise must establish an Inventory Committee chaired by the General Director. Depending on the requirements of the inventory process, the General Director decides on the list of committee members, but it is essential that the Chief Accountant (Head of Accounting Department) be a member.

- The results of asset inventory and account reconciliation must be documented in a record, signed by the Chairman of the Inventory Committee and the Chief Accountant (Head of Accounting Department).

The inventory record must be submitted along with the enterprise's financial report. At the end of the accounting period, a comprehensive asset inventory must be conducted. If full conditions for a comprehensive inventory are not met at the end of the quarter, the enterprise must inventory key assets and reconcile accounts receivable and payable.

b. Organizing internal audit work:

State-owned enterprises must regularly organize internal audits within the enterprise to accurately determine actual economic transactions and expenditures in compliance with state regulations as the basis for preparing accurate annual financial reports.

Enterprise financial reports must be audited and have confirmation from internal audit or independent audit.

3. The General Director of the enterprise has the responsibility to prepare accurate, timely, and complete financial reports in accordance with state regulations. Financial reports must be prepared based on documents containing sufficient legal evidence as stipulated by the current accounting system. Financial reports are considered lawful and valid when they bear signatures of the preparer, auditor, Chief Accountant, General Director, and the enterprise's stamp. If financial reports are inaccurate, lack sufficient legal evidence, or are untimely, the preparer and signatories of the financial reports shall bear legal responsibility.

4. Submission of financial reports:

State-owned enterprises must promptly submit financial reports to relevant agencies as prescribed. Specifically, state-owned corporations must compile and submit financial reports to the State Capital and Asset Management Bureau at the enterprise.

II. PUBLIC ANNOUNCEMENT OF ANNUAL FINANCIAL REPORTS OF STATE-OWNED ENTERPRISES

1. Annually, state-owned enterprises must publicly announce financial reports and information about the enterprise's business situation and results to users of such information as prescribed.

In cases where enterprises have special conditions and are not permitted to widely publicize annual financial information, the enterprise must submit a written report to the Ministry of Finance and the agency that established the enterprise.

Purpose of publicly reporting financial statements:

- Informing the workforce within the enterprise about the financial situation, business performance efficiency, income levels, and other benefits, to implement ownership rights and participate in supervising the management board of the enterprise, encouraging employees to be dedicated to building the enterprise's development.

- Informing state management agencies with grounds to assess the situation and effectiveness of business operations of enterprises, thereby strengthening enterprise management.

- Serving as a basis for domestic and foreign investors to study and decide on investment in enterprises; creditors to evaluate the ability to repay maturing debts.

3. Forms of public disclosure:

- Organizing public reports at the meeting of the enterprise's staff members.

- Publishing information on mass media, magazines, or other forms.

Depending on the specific target audience and purpose, enterprises shall choose appropriate forms of public disclosure and suitable indicators for disclosure. The public disclosure document must be signed by the Chairman of the Board of Directors or the General Director (for enterprises without a Board of Directors) and stamped.

4. Timeframe for public disclosure:

Within the latest thirty days from the date of preparing and submitting the annual financial report according to current regulations, state-owned enterprises must complete the financial public disclosure indicators specified in the annex attached to this circular.

5. Responsibilities of state-owned enterprises regarding disclosed information:

The Board of Directors, General Director (for state-owned enterprises without a Board of Directors) have the duty to clarify any doubts or questions raised about the disclosed indicators and must fully bear legal responsibility for the truthfulness of the financial report or the disclosed information.

III. ACCOUNTING AUDITS AND ANNUAL FINANCIAL REPORTS

1. State financial agencies have the duty to organize regular or surprise audits of accounting work and financial reports of enterprises instead of the previous approval settlement system. Enterprises are responsible for providing documentation, evidence, and explanations for the figures in the financial report to the financial audit organizations.

2. Enterprises must regularly self-organize audits of their accounting records; simultaneously, they must accept audits by the financial agency of the Holding Company (if it is a subsidiary enterprise) and audits by authorized state financial agencies.

3. Prior to conducting an audit, the authorized financial agency needs to carefully study the enterprise's financial reports, establish a plan with specific audit contents, and notify the enterprise to prepare accordingly.

4. At the end of the audit, a record reflecting the full scope of the audit must be established. It should clearly state any violations found along with recommendations for corrections, preventive measures, and handling methods for these violations. The audit record must be confirmed by the enterprise's General Director and the representative of the audit team. If the General Director does not confirm, the audit team representative must report to higher authorities for appropriate action.

5. Auditors must bear legal responsibility for the figures and conclusions recorded in the audit record; they may be rewarded according to current regulations when detecting enterprise violations.

6. Acts violating accounting systems, financial revenue and expenditure regulations, state budget revenue submission, enterprise fund allocation... after being audited and concluded, depending on the severity of individual or collective violations, administrative penalties or criminal liability may be pursued according to the law.

IV. IMPLEMENTATION PROVISIONS

- This Circular takes effect from January 1, 1997. Previous regulations contrary to this Circular are abolished.

- During implementation, if there are any difficulties, relevant agencies and enterprises should promptly report to the Ministry of Finance for guidance and supplementary instructions.