This Circular stipulates the principles and methods of accounting for the settlement of overdue debts between state-owned economic units through the Central Committee for Comprehensive Settlement of Debts and Accounts. Receivables and payables are offset on a case-by-case basis with confirmation from both creditors and debtors. This regulation applies to state-owned economic units that are currently operating.
Scope of application
State-owned economic units that are currently operating
Key points
- State-owned economic units only include in the settlement period receivables and payables that have been confirmed by both creditors and debtors, with lower figures following the confirmed figures.
- The difference in exchange rates between the recorded exchange rate in the accounting books and the exchange rate at the time of payment is accounted for in Account 65 'Exchange Rate Differences and Price Indices', Sub-account 651.
- Units open Sub-account 620 'Settlement of Offset Debts' to reflect receivables and payables settled through the offset method.
- When the amount of overdue debt payable exceeds the limit, the unit transfers funds from its deposit account or bank loan to the Central Debt Settlement Committee.
- State-owned economic units must allocate 0.5% of the collected receivables as enterprise management costs and transfer it to the Central Debt Settlement Committee.
🌐 Social impact of this document
- Positive impact: Helps state-owned economic units reduce financial burdens when implementing offset settlements of receivables and payables.
- Negative impact: May increase management costs for units due to the need to confirm and track each receivable and payable.
- Beneficiaries: State-owned economic units that are currently operating, especially those with many overdue receivables.
❓ Frequently asked questions
What can state-owned economic units do when settling receivables and payables?
Units only include in the current settlement period receivables and payables that have been confirmed by both creditors and debtors, with lower figures following the confirmed figures.
Is there a provision regarding exchange rates?
Yes, if there is a difference between the recorded exchange rate in the accounting books and the exchange rate at the time of payment, it is accounted for in Account 65 'Exchange Rate Differences and Price Indices', Sub-account 651.
How much percentage must state-owned economic units allocate from the collected receivables?
0.5% (five thousandths) of the collected receivables must be allocated and transferred to the Central Debt Settlement Committee.
If the amount of overdue debt payable exceeds the limit, what should the unit do?
The unit transfers funds from its deposit account or bank loan to the Central Debt Settlement Committee.
Which sub-account is used to reflect receivables and payables?
Sub-account 620 'Settlement of Offset Debts' is opened to reflect receivables and payables settled through the offset method.
Full text
CIRCULAR
OF THE MINISTRY OF FINANCE
Accounting Guidance for Overdue Debts
between State-Owned Economic Units
Implementing Decision No. 104/CT dated April 10, 1991 of the Chairman of the Council of Ministers on the settlement of receivables and payables among state-owned economic units, the Ministry of Finance provides accounting guidance for the settlement of overdue receivables and payables among operating state-owned economic units through the Central Committee for General Settlement of Receivables and Payables as follows:
1. Principles of Accounting for Settlement of Offset Debts
- Only include in this period's settlement debts of operating state-owned economic units that have been confirmed by both debtor and creditor. In cases where the debtor's confirmed amount is lower than the creditor's amount, settle according to the debtor's confirmed amount. The disputed difference is set aside and temporarily transferred to account 67 "Assets Awaiting Disposal" sub-account 671 missing assets (details of disputed receivables and payables) for verification, reconciliation, and final settlement after this round of settlement.
- The debts included in the settlement must be confirmed by each debtor and creditor. The total amount of overdue receivables or overdue payables requested for settlement must match the total overdue receivables or payables of all settlement objects in this period.
- For overdue debts settled in foreign currency, if there is a discrepancy between the exchange rate recorded in the accounting books and the exchange rate at the time of debt settlement, this discrepancy is recorded in account 65 "Exchange Rate Differences and Price Indices" sub-account 651 foreign currency exchange rate differences."
- The basis for recording in the accounting books is confirmation documents for settled receivables and payables or transfer/payment receipts...
- To account for offsetting receivables and payables, units may open sub-account 620 "Settlement of Offset Debts." The Central Committee for General Settlement of Receivables and Payables falls under account 62 "Receivables and Payables."
The content reflected in sub-account 620 is as follows:
Debtor side:
- Overdue receivables transferred for settlement in this period (by detail of each object);
- Units transferring funds deposited or borrowed from banks to the Settlement Committee for payment of overdue payables.
Creditor side:
- Overdue payables transferred for settlement in this period (by detail of each creditor).
- Remaining receivables transferred from overdue loan payables to banks, credit cooperative payables, and other outstanding payable items.
- Receiving funds from the Settlement Committee for remaining receivable payments.
- Fees payable to the Settlement Committee as stipulated.
Debit balance: The difference where receivables exceed payables, which the unit has not yet been settled.
Credit balance: The difference where payables exceed receivables, which the unit has not yet transferred funds or borrowed to repay the Settlement Committee.
When the settlement of the difference (debit or credit balance) is completed, sub-account 620 is closed.
2. Accounting for Offset Debts.
2.1. Detailed Accounting for Receivables and Payables Settled in This Period.
After receiving notification and settlement orders from the Central Committee for General Settlement of Receivables and Payables, unit accountants must record reductions in receivables and payables for each creditor and debtor based on confirmation documents on detailed settlement ledgers.
2.2- Summary Accounting for Offset Settlement Between Receivables and Payables.
a) Accounting for Overdue Receivables.
Based on the aggregated data of overdue receivables analyzed by nature and object of receivables (receivables from buyers, sellers, contractors, joint venture partners, and others), accountants record:
Debit Account 62 - Receivables and Payables
(620 - Settlement of Offset Debts)
(Central Settlement Committee).
Credit Account 60 - Payments to Sellers
61- Payments to Buyers
62- Receivables and Payables
(622 - Other Receivables and Payables)
66- Joint Venture Capital.
b) Accounting for Overdue Payables.
Based on the aggregated data of overdue payables analyzed by nature and each debtor, accountants record:
Debit Account 60 - Payments to Sellers
61- Payments to Buyers
62- Receivables and Payables
(622 - Other Receivables and Payables)
Credit Account 62 - Receivables and Payables
(620 - Settlement of Offset Debts)
(Central Settlement Committee).
c) Accounting for Overdue Receivables and Payables in Foreign Currency.
For receivables and payables to be settled in foreign currency, if there is a discrepancy between the exchange rate recorded in the accounting books and the exchange rate at the time of debt settlement when converting to Vietnamese Dong, accountants record:
- Overdue Receivables:
Debit Account 62 - Receivables and Payables
(620 - Settlement of Offset Debts) (Central Settlement Committee) calculated at the settlement exchange rate.
Credit Account 60 - Payments to Sellers (calculated at the recorded exchange rate).
61- Payments to Buyers (calculated at the recorded exchange rate).
62- Receivables and Payables (622) (calculated at the recorded exchange rate).
66- Joint Venture Capital (calculated at the recorded exchange rate).
65- Exchange Rate Differences and Price Indices.
(651 - Foreign Currency Exchange Rate Differences)
(The difference between the settlement exchange rate and the recorded exchange rate).
- Overdue Payables:
Debit Account 60 - Payments to Sellers (calculated at the recorded exchange rate).
61- Payments to Buyers (calculated at the recorded exchange rate).
62- Receivables and Payables (622) (calculated at the recorded exchange rate).
65- Exchange Rate Differences and Price Indices.
(651 Exchange Rate Differences at the settlement exchange rate higher than the recorded exchange rate).
Credit Account 62 - Receivables and Payables
(620 - Settlement of Offset Debts) (Central Settlement Committee) - (calculated at the settlement exchange rate).
d) Accounting for the Difference in Overdue Receivables and Payables After Offset Settlement.
- The difference in overdue payables exceeds overdue receivables.
According to the regulations of the Central Committee for General Settlement of Receivables and Payables, units with remaining payables must transfer funds from their own deposit accounts or request bank loans to transfer to the Central Settlement Committee. Based on transfer or loan documents, accountants record:
Debit Account 62 - Receivables and Payables
(620 - Settlement of Offset Debts)(Central Settlement Committee)
Credit Account 51 - Bank Deposits.
90- Short-term Bank Loans.
- The difference in overdue receivables exceeds overdue payables:
According to the regulations, this difference shall first be used to settle overdue loans from the Bank, credit unions, and overdue payments to the State budget. If there is still a surplus difference, the Central Settlement Office will transfer it to the account of the entity at the bank where the entity has an account.
When receiving notification from the Central Settlement Office and the Bank or Credit Fund regarding the amount repaid for the Bank and Credit Union loans, the accountant records:
Debit Account 90: Short-term loans from the Bank
91 - Long-term loans from the Bank
92 - Loans from other entities
Credit Account: 62 - Receivables and Payables
(620 - Offset settlement - Central Settlement Office).
When receiving notification from the Central Settlement Office and the Treasury regarding the amount of overdue payments settled with the State budget, the accountant records:
Debit Account 64 - Settlement with the State Budget
Credit Account 62 - Receivables and Payables
(620 - Offset settlement - Central Settlement Office).
When receiving notification from the Central Settlement Office and the Bank regarding the amount transferred to the entity's account, the accountant records:
Debit Account 51 - Bank Deposits
Credit Account 62 - Receivables and Payables
(620 - Offset settlement - Central Settlement Office).
3- Accounting for fees payable to the Central Settlement Office for recovered debts.
According to the Council of Ministers' regulations, entities must pay 0.5% (five thousandths) of the recovered debt amount to the Central Settlement Office. This fee is recorded as enterprise management expenses. Upon receipt of notification from the Central Settlement Office regarding the fee that the entity must pay, which is deducted from the receivable amount or the entity deducts from its deposit account or borrows from the Bank to pay the Central Settlement Office, the accountant records:
Debit Account 33 - Enterprise Management Expenses
Credit Account 62 - Receivables and Payables
(620 - Offset settlement - Central Settlement Office) (deducted from receivables).
or 51 - Bank Deposits (entity transfers bank deposits to pay)
or 90 - Short-term loans from the Bank (entity borrows from the Bank to pay).
The above are some provisions and guidelines for accounting for offset settlement through the Central Settlement Office. In the course of implementation, if there are any difficulties, entities, sectors, and localities are advised to report to the Ministry of Finance for timely research and supplementary guidance.
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