Joint Circular No. 74/2008/TTLT/BTC-BNN guiding financial management regulations in agricultural cooperatives

JOINT CIRCULAR

Guidelines for Financial Management in Agricultural Cooperatives

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Based on the Law on Cooperatives 2003;

Based on the Accounting Law 2003;

Based on Decree No. 177/2004/NĐ-CP dated October 12, 2004 of the Government detailing certain provisions of the Law on Cooperatives 2003;

To ensure strict, effective, and lawful financial management in agricultural cooperatives, the Ministry of Finance and the Ministry of Agriculture and Rural Development issue guidelines for financial management in agricultural cooperatives as follows:

This technical regulation sets out technical requirements, testing methods, sampling procedures; management requirements; responsibilities of organizations and individuals producing, trading, and importing cigarettes.

Article 1. These Circulars apply to agricultural, forestry, fishery, and salt-making cooperatives collectively referred to as agricultural cooperatives (Cooperatives).

Article 2. Cooperatives shall base themselves on these Circulars' provisions to develop internal financial management regulations suitable for their characteristics and operational conditions; such regulations must be approved by the General Assembly of Members and strictly implemented, ensuring voluntariness, transparency, democracy, and compliance with the law.

Chapter II. MANAGEMENT AND USE OF COOPERATIVE FUNDS

Clause 1. Registered Capital of Cooperatives:

1.1 The registered capital of a cooperative is the total amount of capital contributed by members according to Clause 1, Article 14 of Decree No. 177/2004/NĐ-CP dated October 12, 2004 of the Government detailing certain provisions of the Law on Cooperatives 2003 (hereinafter referred to as Decree No. 177/2004/NĐ-CP), and recorded in the cooperative's charter.

Clause 1.2 Increase or Decrease in Registered Capital of Cooperatives:

The General Assembly of Members decides on adjustments to increase or decrease the registered capital of the cooperative according to Clause 5, Article 14 of Decree No. 177/2004/NĐ-CP.

Clause 2. Cooperative Shareholders' Capital:

Cooperative shareholders' capital is divided into two types:

Clause 2.1 Non-Distributable Capital of Cooperatives: b) Explanation and calculation of cost components and profit of Electricity Corporation i, including:

a) Capital formed from cooperative savings: This is the portion of post-tax profit that the General Assembly of Members decides to allocate partially or entirely to supplement the cooperative's business capital.

b) Cooperative funds: These are funds allocated from post-tax profits including production development funds, reserve funds, and other funds (if any) as stipulated in Clause 1, Article 17 of Decree No. 177/2004/NĐ-CP and decided upon by the General Assembly of Members.

c) Subsidy capital: This includes state grants, gifts, and donations from domestic and foreign organizations and individuals to the cooperative. If the grant is in kind, the cooperative establishes a valuation committee to convert it into monetary value at the time of receipt. The cooperative must manage this source of capital strictly according to Article 15 of Decree No. 177/2004/NĐ-CP and the cooperative's charter.

Clause 2.2 Distributable Capital of Cooperatives:

Distributable capital of cooperatives is the capital contribution of members: Members joining the cooperative must contribute capital according to Clause 1, 2, 3, Article 14 of Decree No. 177/2004/NĐ-CP and the cooperative's charter.

Members are entitled to have their contributions refunded when they cease membership status according to Clause 2, Article 31 of the Law on Cooperatives 2003. Refunding contributions to members is based on the cooperative's financial situation at the time of refund, after the cooperative has settled its annual accounts and resolved all economic rights and obligations between members and the cooperative. The form and timeframe for refunding member contributions must comply with the cooperative's charter regarding capital contributions and relevant laws.

Clause 3. Borrowed Capital and Unmatured Debts:

Clause 3.1 Borrowed Capital:

Cooperatives have the right to raise capital according to the law to serve production and business activities and bear full responsibility for the effectiveness of the raised capital, fully repaying both principal and interest to creditors according to the loan agreement.

Cooperatives may organize internal credit operations to mobilize idle capital from members to serve the production and business activities of the cooperative and member households.

Interest rates for raising capital must comply with loan agreements with financial and credit institutions without exceeding the ceiling set by the State Bank of Vietnam. In cases of direct borrowing from individuals or other economic organizations, the maximum interest rate cannot exceed 1.2 times the rate set by the State Bank of Vietnam at the time of borrowing.

Clause 3.2 Unmatured Debts:

These are debts not yet due for payment, interest not yet due for distribution, which cooperatives can use to serve production and business activities.. Cooperatives are responsible for maintaining detailed records of all debts payable, including interest payable, and settling debts payable according to the agreed deadlines.

Clause 4. Other Legally Raised Capital as prescribed by law.

Clause 5. Authority to decide on borrowing; lending; joint venture capital contribution, investment in establishing enterprises within cooperatives; investment in purchasing and selling fixed assets; and replenishing working capital is specifically defined in the cooperative's charter approved by the General Assembly of Members and consistent with relevant laws.

Chapter III. MANAGEMENT OF ASSETS AND CAPITAL OF COOPERATIVES

Cooperative assets are divided into two categories: Fixed Assets (FA) and Long-term Investments; Current Assets (CA) and Short-term Investments.

Clause 1. Fixed Assets and Long-term Investments:

Clause 1.1 Fixed Assets of Cooperatives: This includes tangible and intangible fixed assets. Standards for determining fixed assets; management, use, and depreciation of fixed assets are carried out according to the regulations of the Ministry of Finance.

Clause 1.2 Long-term Investments: These are amounts cooperatives invest (in cash or assets, labor) in other entities to establish businesses, cooperatives, joint ventures, or joint business contracts sharing risks and profits from business operations.

Cooperatives must maintain accounting records to track long-term investments and the profitability of investment activities. Regularly analyze and evaluate the effectiveness of long-term investment activities.

Clause 2. Current Assets and Short-term Investments:

Clause 2.1 Current Assets: This includes various types of materials, fuel, tools, products, goods, semi-finished products, work-in-progress, cash reserves, bank account balances, receivables, stock certificates, and bonds in reserve. Cooperatives must maintain books under a strict and scientific management system and use current assets effectively.

Clause 2.2 Management of Current Assets:

- Periodically (at the mid-year and year-end), the Cooperative must inventory and determine the quantity, quality, and value of current assets; if excess is discovered, it shall be recorded as other income; if shortage is found, the cause must be identified: If due to objective reasons, the loss value shall be recorded in the business results; if due to subjective reasons, responsibility of organizations or individuals must be determined to demand full or partial compensation for the loss value; in cases of partial compensation for the loss value, the remaining portion shall be recorded in the business results.

- All cases of warehouse entry and exit must establish complete documents and record relevant ledgers (warehouse entry and exit forms; material and product stockbooks).

- The accounting price for incoming current assets purchased externally: Is the purchase price plus transportation costs, storage costs, insurance fees, selection fees, recycling fees (if applicable), import duties for imported goods.

- The accounting price for incoming current assets manufactured internally: Is the raw material price from the warehouse plus actual costs incurred during the manufacturing process.

- The accounting price for outsourced processed materials: Is the actual raw material price from the warehouse plus processing costs, transportation costs, loading and unloading costs.

- The entire value of current assets already used must be included in the cost of the object using them during the production and business period of the Cooperative.

In cases where tools and equipment with high value and usage time exceeding one year are used, they should be allocated over multiple production periods but not more than three years.

- The Cooperative must establish consumption quotas for materials and fuel for each product; annually review and adjust these quotas to save costs, lower prices, and enhance product competitiveness in the market.

- The Cooperative may account for the provision for reduction in inventory value as part of operating expenses before preparing the annual financial report. The establishment and use of this provision shall be carried out according to Circular No. 13/2006/TT-BTC dated February 27, 2006, issued by the Ministry of Finance, guiding the system for establishing and using provisions for reduction in inventory value, investment losses, bad debt provisions, and product warranties at enterprises.

- The Cooperative must establish financial management regulations and maintain strict records of cash inflows and outflows, deposits, banknotes, stocks, bonds, foreign currencies. The cashier must fully and promptly reflect all receipts and payments, and comply with the cash management regulations.

Monthly, the Cooperative must organize cash audits and reconcile account balances with the bank.

3. Internal Credit Activities:

3.1 The Cooperative uses idle funds of the Cooperative and mobilizes savings from members to lend to members through internal credit activities. The Cooperative must develop plans regarding: Mobilized funds, loaned funds, lending interest rates, deposit interest rates, physical facilities, and conditions for implementing internal credit activities. Develop internal credit activity regulations consistent with relevant laws and approved by the General Assembly of Members.

3.2  The Cooperative must separately account for internal credit activities: Maintain ledgers for lending activities, receiving deposits, and related income and expenditure activities. At the end of each month and quarter, conduct cash audits and reconcile receivables and payables; Organize management work according to Circular No. 06/2004/TT-NHNN dated September 27, 2004, guiding internal credit activities of Cooperatives, Circular No. 04/2007/TT-NHNN dated June 13, 2007, of the State Bank of Vietnam amending and supplementing Circular No. 06/2004/TT-NHNN, and current financial and accounting systems.

IV. MANAGEMENT OF INCOME AND EXPENSES

1. Management of Income:

1.1 Cooperative Income: Is the total value of products and services sold and provided by the Cooperative to members and customers, which have been paid for or accepted for payment (even if not yet received), including:

a) Income from production and business activities: Is the total value of products and services sold and provided to customers, which have been paid for or accepted for payment (even if not yet received).

b) Income from service activities for members: Includes revenues from support services for members' production and business activities such as irrigation water services, clean water services, supply of materials, seeds, fertilizers, pesticides, land preparation, electricity for daily life, technology transfer, and other cultural and social services for members such as elderly care services, funeral services, environmental sanitation services.

The Cooperative must track and separately account for these income items as a basis for tax exemptions and reductions on corporate income tax according to Decree No. 88/2005/NĐ-CP dated July 11, 2005, of the Government on certain policies to encourage the development of Cooperatives.

c) Income from financial activities: Includes interest income from bank deposits, interest income from internal credit activities, income from trading in government securities and stocks, and long-term investment income.

d) Income from other activities: Includes state subsidies (agricultural support, electricity subsidies, etc.), rental income, proceeds from the liquidation or sale of fixed assets, and other extraordinary income.

All income items must be calculated in monetary terms. In cases where income is received in kind or through barter transactions, it must be converted to monetary value at the time of payment or acceptance for payment for accounting purposes.

All income generated during the period must be supported by invoices and documents and must be fully and promptly reflected in the accounting books according to the current accounting system.

1.2 Items Not to Be Recorded as Income, including:

a) Recovered debts, advance payments, member contributions, and joint venture capital contributions from other organizations and individuals.

b) State investment support:

- State investment support (in cash or in kind) for transportation, irrigation, and other infrastructure: After receiving the assets for management and use, increase undistributed capital of the Cooperative.

- Subsidies for transportation costs supporting mountainous and border regions: The Cooperative shall reduce expenses in the year.

c) Money or property donated to the Cooperative by organizations or individuals: Record as an increase in money or property; simultaneously increase undistributed capital of the Cooperative.

d) At the time of preparing the final settlement report, if the cooperative has issued sales invoices and received payment but has not yet delivered the goods, the amount received shall not be recorded as revenue, but shall be accounted for as a pre-receipt from customers.

1.3. Some matters to note when accounting for revenue:

a) For goods sold on consignment by other units, revenue is the commission income that the cooperative earns.

b) When the cooperative undertakes processing of materials and goods, revenue is calculated based on the value of processing recorded on the invoice (including labor costs, fuel, power, auxiliary materials, and related expenses) of the completed processed products accepted for payment by the party contracting the processing during the period.

c) For products, goods, and services produced by the cooperative for exchange, gifts, rewards, or provision to employees, revenue is the market selling price of similar or equivalent products at the time the activity occurs.

d) For products and services produced by the cooperative for internal production and business purposes, such as the cooperative's diesel generators, or products produced to become fixed assets of the cooperative, revenue consists of the direct and indirect costs incurred in producing those items.

đ) For leasing activities where advance rent payments are received for multiple years, the cooperative shall account for these advance receipts as a liability. Annual rental revenue is calculated by dividing the total rent received by the number of years for which the lease payments have been received.

e) For service activities under contractual assignments within the cooperative, revenue is the amount due according to the contract until it becomes payable.

g) For lending activities, interest income from deposits, and income from financial leasing operations, revenue is the interest receivable for the period determined as follows: Interest receivable on loans within their due date. Interest receivable on overdue loans is not included in revenue but is tracked outside the balance sheet; when collected, it is recorded as operating income.

h) Revenue denominated in foreign currency shall be converted into Vietnamese Dong at the average inter-bank exchange rate published by the State Bank of Vietnam at the time the revenue is generated.

2. Management of Costs and Production Costs:

2.1. Operating Costs for Production and Business Activities:

- Operating costs for production and business activities in the cooperative include direct costs and related indirect costs.

- Financial activity costs: Costs for purchasing and selling bonds and stocks, and internal credit activity costs.

The cooperative must record and reflect all actual costs incurred for each service and each production and business sector. The management and accounting of costs are carried out as follows:

a) DIRECT COSTS:

- Material costs: Including raw material, material, fuel, tool costs. The management of material costs is conducted through two stages: consumption levels and material prices (as stipulated in Clause 2, Section III of this Circular).

In cases where materials are purchased directly from producers without invoices, the buyer must prepare a detailed list, clearly stating the seller's name, address, quantity of goods, unit price, total amount, signature of the seller, and approval by the cooperative manager for disbursement.

- Depreciation costs of fixed assets (as stipulated in Clause 1, Section III of this Circular).

- Labor costs: Including wages paid to cooperative members and external hired workers directly involved in production and business activities, commensurate with market rates at the time of hiring (if paid in kind, they are converted to monetary value).

- External service costs: Costs for repairing leased fixed assets, electricity and water charges, freight and transportation fees, and other external services, only recorded based on actual expenditures supported by valid and reasonable documentation.

- Marketing promotion costs: Purchasing market information, hiring economic and trade consultants, market-seeking activities, renting exhibition booths. Investment costs for establishing representative offices and branches abroad are capitalized as fixed assets.

The cooperative management council establishes cost management regulations for production and business activities through the General Assembly and publicly announces them as a basis for management, operation, and supervision. The cooperative manager decides on expenditure levels and is responsible to the General Assembly for such decisions.

b) Cooperative Management Costs:

- Office material costs.

- Depreciation and repair costs of office fixed assets.

- Wages of cooperative management staff: Based on production and business conditions, the management council applies the guidelines in this Circular to establish and submit to the General Assembly for approval the wage levels for cooperative management staff.

The wages of cooperative management staff are determined using three methods:

+ Minimum wage coefficient combined with production and business performance indicators.

+ A percentage of revenue combined with production and business performance indicators.

+  A percentage based on production and business performance.

The selection and application of one of the three methods above to calculate the wage fund for cooperative management staff is decided by the General Assembly.

(Methods for determining the wages of cooperative management staff - Appendix 1 attached).

- Social insurance costs: Cooperative members and regular employees who receive wages from the cooperative must contribute to mandatory social insurance according to the Labor Code. Contribution rates for social insurance are implemented according to Decree No. 152/2006/NĐ-CP dated December 22, 2006, guiding certain provisions of the Law on Social Insurance regarding mandatory social insurance, and Circular No. 03/2007/TT-BLDTBXH dated January 30, 2007, of the Ministry of Labor, War Invalids, and Social Affairs.

The social insurance cost (the part contributed by the cooperative for management staff) is calculated as follows: Paying 21% of the basic salary to the social insurance agency, of which: the employee contributes 5%, and the remaining 16% is included in the production and business costs for the period and recorded as a general management expense of the cooperative (the basic salary level for each individual is decided by the General Assembly).

- Social Health Insurance Costs: Members and workers who regularly work for the Cooperative and receive wages from the Cooperative shall contribute to social health insurance in accordance with the provisions of the Labor Code. The contribution rate is calculated as follows: 2% of the basic wage is paid to the social health insurance agency, of which the worker contributes 1%, and the remaining 1% is included in the Cooperative's general management expenses.

- External Service Costs: lighting electricity, telephone.

- Other monetary expense items include: interest payments on loans from organizations and individuals (excluding interest on loans for construction investment and fixed asset purchases); sales expenses, various taxes, and other financial obligations payable to the State.

- Travel expenses for Cooperative staff and members, reception costs, hospitality expenses, transaction costs serving the production and business operations of the Cooperative, conference costs must have clear objectives, be effective and economical; the level of expenditure shall be determined according to each Cooperative's conditions and submitted for approval at the General Assembly of Members. When determining production and business operation costs for calculating corporate income tax, reference shall be made to Circular No. 23/2007/TT-BTC dated March 21, 2007 issued by the Ministry of Finance regarding travel expenses and conference organization expenses for state agencies and public institutions; and Circular No. 57/2007/TT-BTC dated June 11, 2007 issued by the Ministry of Finance regarding reception expenses for foreign visitors working in Vietnam, international conference and seminar expenses in Vietnam, and domestic hospitality expenses.

At year-end, Cooperative management costs are consolidated and allocated to calculate the cost of each product and service provided by the Cooperative based on revenue or cost of each activity.

The following items shall not be included in production and business operation costs:

- Penalties for breach of contract or violation of laws such as the Labor Law, Tax Law, Environmental Protection Law, Traffic Law, and failure to comply with reporting and statistical, financial accounting regulations. If the penalty is due to the Cooperative's violation, it shall be deducted from the Cooperative's post-tax profit; if the violation is committed by a group of people or an individual, that group or individual must pay the fine.

- Investment costs for basic construction, purchase of fixed assets, and interest payments on loans for construction investment and fixed asset purchases during the period before they are put into use shall be recorded as part of the original value of those fixed assets.

- Advance payment expenses, loan repayment expenses, and principal repayment expenses for internal depositors in internal credit activities.

- Expenses related to the contents of Cooperative funds (development fund, reserve fund).

2.2 Cost of Products Sold and Service Costs Consumed During the Period.

The cost of products sold and service costs include direct costs and indirect costs, which are determined as follows:

a) The cost of products sold during the period is calculated using the weighted average method of the cost of products produced during the period and the cost of opening inventory. The service costs consumed during the period are determined by adding the beginning work-in-progress costs, current period costs, and subtracting the ending work-in-progress costs.

b) Newly incurred Cooperative management costs are fully allocated to the cost of products sold and service costs consumed during the period. In cases where the production cycle of the product is long or has special characteristics, the Cooperative may allocate management costs appropriately to match the volume of products sold during the period, inventory, and ending work-in-progress.

Depending on the production and business conditions, the Cooperative shall determine the object and select an appropriate method to calculate the cost of products and services.

V. MANAGEMENT OF ACCOUNTS PAYABLE

1. Accounts Payable:

Accounts payable arise from borrowing or transactions involving the purchase of materials, products, goods, and services and should be classified according to the debtor and the nature of the debt, including: payable to financial institutions, payable to suppliers, payable to the State, payable to members, and other payable items.

The Cooperative must maintain detailed records to track each creditor, the content of each loan, the loan term, and each payment.

Accounting personnel must monitor loan repayments, conduct checks and supervision to ensure that borrowed funds are used for their intended purpose and that debts are repaid on time without generating overdue debts.

2. Accounts Receivable

2.1 Accounts Receivable within the Cooperative b) Explanation and calculation of cost components and profit of Electricity Corporation i, including:

a) Customer Receivables: These are products, goods, and services sold by the Cooperative to customers but not yet paid for.

b) Internal Credit Receivables: These are internal loans (both principal and interest) within the Cooperative.

c) Other Receivables: These are receivables from individuals and units inside and outside the Cooperative for temporary loans and compensation for material losses.

2.2 The Cooperative must maintain detailed records to track each debtor, the content of each receivable, and each payment. For receivables in kind, tracking the recovery of physical assets is necessary to preserve capital when prices fluctuate.

For regular and periodic customer accounts receivable, reconciliation of receivables, payments received, and outstanding amounts must be conducted, and confirmation of the debt with the Cooperative in writing is required.

At the end of the accounting period, the Cooperative shall establish a provision for doubtful accounts receivable in accordance with Circular No. 13/2006/TT-BTC dated February 27, 2006 issued by the Ministry of Finance guiding the establishment and use of financial investments, bad debts, and warranty expenses for goods and construction projects at enterprises.

Doubtful accounts receivable are debts that have been overdue for two years or more, which the Cooperative has repeatedly attempted to collect but has not recovered; or debts that are less than two years overdue but the debtor is currently under consideration for dissolution, bankruptcy, death, disappearance, or legal prosecution.

Annually, the Cooperative shall establish a committee to handle and settle assets and debts to address these debts. After handling responsibility and compensating losses to organizations and individuals, the loss from write-offs shall be recorded as a reduction in the provision for doubtful accounts receivable; if insufficient, the Financial Reserve Fund shall be used to make up the difference, and if still insufficient, it shall be recorded as a production and business operation cost for the year. If the write-off is recorded as a business cost and results in a loss, the loss shall be carried forward to the next year in accordance with tax laws; if there is a loss for three consecutive years, the Management Board shall report to the General Assembly of Members to decide on reducing the Cooperative's charter capital.

After processing as mentioned above, difficult-to-collect receivables shall still be monitored separately and organized for recovery. The amount recovered shall be recorded as income of the Cooperative.

3. Management, monitoring, and payment of advances:

An advance is a sum of money that the Cooperative pre-pays to its staff or members for implementing tasks approved by the Cooperative Director.

The monitoring and accounting of advances shall be carried out according to the following regulations:

- The recipient of the advance must be a staff member or member of the Cooperative.

- The request for an advance must clearly state the name, address (unit, department), amount requested, reason for the advance, purpose of using the advance, repayment date, and must be signed off by the Cooperative Director. The accountant prepares a payment voucher attached to the advance request form and transfers it to the cashier for disbursement.

- The advance must be repaid immediately upon completion of the task. If the repayment is delayed beyond the date specified on the advance request form, the person receiving the advance and the accountant responsible for monitoring the advance shall bear responsibility according to the Cooperative's financial management and accounting regulations.

- The recipient of the advance must use the funds for the purposes stated on the advance request form, repay within the stipulated time frame, and provide all original supporting documents. A person who has not yet repaid a previous advance shall not be granted another advance.

- The Cooperative shall maintain detailed records of advances, tracking each recipient and each advance and repayment.

4. Management of taxes payable and financial obligations to the State:

The Cooperative shall fully comply with the provisions of laws and regulations concerning taxes. The Cooperative shall monitor the amounts due, paid, and remaining unpaid for each tax and financial obligation to the State.

5. Management of payments to members and employees:

Payments to members and employees of the Cooperative include wages, interest, and other amounts payable.

The Cooperative shall maintain detailed records tracking each individual and each payment amount. For payments made in kind, detailed records shall be kept showing quantity, unit price, and total amount payable; simultaneously, the Cooperative shall maintain payment records for each household member to ensure financial transparency and democratic practices, and shall not make payments through teams or groups.

VI. DISTRIBUTION OF COOPERATIVE PRODUCTION AND BUSINESS RESULTS

1. Profit and profit distribution

1.1 Profit is the result of the Cooperative's production and business activities in a year, including:

- Revenue exceeding expenses from production and business activities of products, goods, and services.

- Financial activity revenue exceeding expenses (interest from bank deposits, internal credit activities, stock and bond trading).

- Other profits.

1.2 The entire profit of the Cooperative in a year shall be distributed as follows:

a) Covering losses from previous years (not exceeding five years) of the Cooperative in accordance with the Enterprise Income Tax Law.

b) Paying taxes as prescribed by tax laws.

c) Deducting amounts owed for breach of contract and violation of laws attributable to the Cooperative.

d) The remaining profit shall be distributed as follows:

- Establishing mandatory reserves as prescribed, including the Production Development Fund and the Contingency Fund. The annual contribution rate for these two funds shall be determined by the General Assembly of Members but shall not be lower than the provisions set forth in Article 17 of Decree No. 177/2004/ND-CP dated October 12, 2004 of the Government. The establishment of other reserves shall be decided by the General Assembly of Members based on the Cooperative's conditions.

- Distributing according to the capital contribution, labor contribution of members, and the extent of service usage from the Cooperative.

(Example of profit distribution - Appendix 2)

2. Handling losses:

Losses of the Cooperative include production and business losses, financial activity losses, and other losses.

The handling of Cooperative losses shall be governed by Article 20 of Decree No. 177/2004/ND-CP.

3. Purpose of Cooperative Funds:

3.1 Production Development Fund: For expanding production and business activities, modernizing technology, agricultural extension work, training and development of Cooperative staff (to offset the portion not supported by the State under the prescribed system).

3.2 Contingency Fund: To offset losses caused by unforeseen events and production and business losses.

3.3 Welfare Fund: For welfare spending on members, poverty alleviation, and community development.

3.4 Reward Fund: For rewarding collectives and individuals who have contributed to business operations and product sales.

3.5 Regarding other funds: The General Assembly of Members decides on the establishment of these funds and clearly defines their usage in the Cooperative's charter.

VII. FINANCIAL REPORTING AND FINANCIAL AUDIT

1. Financial Reporting:

At the end of the accounting period (mid-year report, annual report), the Cooperative is responsible for preparing financial reports in accordance with the Ministry of Finance's accounting regulations applicable to Cooperatives and submitting them to the Economic Department, Agricultural Department, and Tax Office (district, county).

The People's Committee of the district is responsible for compiling the financial reports of Cooperatives in its jurisdiction and submitting them to the Provincial Department of Finance and Agriculture. The Provincial Department of Finance, in collaboration with the Provincial Department of Agriculture, is responsible for consolidating and analyzing the business operations of Cooperatives and submitting the reports to the Ministry of Finance (Enterprise Financial Bureau), the Ministry of Agriculture (Cooperative Economy and Rural Development Bureau), and the People's Committee of the province or centrally-administered city.

2. Financial Transparency:

The Cooperative Director is responsible for publicly disclosing the financial situation annually to members and before the General Assembly of Members.

The main contents of the public financial report include:

- Total income: Specific sources of income.

- Total expenditure: Specific items of expenditure.

Detailed income and expenditure by industry, type of service or product, and results of profit or loss from such activities.

- Results of profit distribution and loss handling.

- Debts within the Cooperative: old debts, newly incurred debts, overdue debts, due debts, and difficult-to-collect debts.

- Results of asset inventory and Cooperative capital.

3. Transfer of Financial Management Responsibilities:

When transferring responsibilities between the old and new Management Boards, old and new Directors, or old and new Chief Accountants, a handover record must be prepared, confirmed by the Cooperative's Supervisory Board, and comply with national regulations on asset and financial management systems. The old Management Board, Director, and Chief Accountant are responsible for their completed tasks; the new Management Board, Director, and Chief Accountant shall assume legal authority and responsibility for managing the Cooperative's finances and assets from the date of handover.

4. Financial accounting inspection:

4.1 The Chief Accountant of the Cooperative has the responsibility to regularly inspect internal accounting work.

4.2 The Supervisory Board is responsible for monitoring and inspecting (internal audit) financial accounting activities in accordance with the law and the cooperative's charter. Inspect and control management and usage standards for materials, assets, capital, funds; manage income and expenditure and distribution of income; inspect the implementation of financial plans, compliance with state financial policies, accounting, and statistical regulations.

4.3 The Economic Office of the district has the duty to guide and inspect the implementation of financial systems and accounting practices by the cooperative.

5. Management system for file documentation:

The cooperative must implement the management and retention of financial and accounting documents, vouchers, and files in accordance with state regulations.

VIII. IMPLEMENTATION

1. The Department of Corporate Finance under the Ministry of Finance and the Department of Cooperative Economy and Rural Development under the Ministry of Agriculture and Rural Development shall direct the Departments of Finance and Agriculture and Rural Development of provinces and centrally-administered cities to organize the implementation of this Circular. The Departments of Finance and Agriculture and Rural Development shall provide regular guidance and inspection on the financial management of cooperatives and enforce reward and punishment systems according to current regulations.

2. Based on the guidelines of this Circular, the Management Board of the cooperative shall apply and develop Internal Financial Management Regulations of the cooperative, submit them to the General Assembly of Members for approval and implementation.

3. This Circular takes effect fifteen days from the date of publication in the Official Gazette and replaces Joint Circular No. 48/2002/TTLT-BTC-BNNPTNT dated May 28, 2002, issued by the Ministry of Finance and the Ministry of Agriculture and Rural Development regarding guidelines for financial management of cooperatives.

Any difficulties encountered during implementation should be promptly reported to the Ministry of Finance and the Ministry of Agriculture and Rural Development by relevant ministries, sectors, provincial People's Committees, centrally-administered city People's Committees, and cooperatives for supplementary guidance to ensure appropriateness./.