Circular No. 81/2007/TT-BTC guiding the financial management regime for the Cooperative Development Support Fund

CIRCULAR

Guidelines on the financial management regime for the Cooperative Development Support Fund

Pursuant to Decision No. 246/2006/QĐ-TTg dated October 27, 2006, of the Government Chairman regarding the establishment, organization, and operation of the Cooperative Development Support Fund;

Pursuant to the Charter on the organization and operation of the Cooperative Development Support Fund issued by the Minister of Finance under Decision No. 59/2007/QĐ-BTC dated July 11, 2007, the Ministry of Finance hereby issues guidelines on the financial management regime for the Cooperative Development Support Fund 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 the Cooperative Development Support Fund.

Article 2. The Cooperative Development Support Fund shall be capitalized with state budget funds. The Fund is responsible for preserving capital and covering expenses. The Fund is exempt from taxes and other payments to the state budget for activities supporting the development of cooperatives and cooperative unions in areas such as product innovation, technological and technical innovation, market development, expanding product sales, building and replicating new cooperative models, and exemplary advanced cooperative models.

Article 3. The Cooperative Development Support Fund is an independent accounting unit, using its income to cover costs during its operations; it may distribute financial surplus according to the provisions of this Circular.

Article 4. The Management Board and Director of the Cooperative Development Support Fund are responsible to the Prime Minister for the safekeeping of the Fund's capital and assets, their proper and effective use for intended purposes.

Article 5. The Ministry of Finance performs the State’s management function over finance. The Vietnam Union of Cooperatives is responsible for guiding, inspecting, and approving the annual financial revenue and expenditure settlement of the Cooperative Development Support Fund and reporting to the Ministry of Finance.

Chapter II. PROVISIONS ON CAPITAL AND ASSETS

Clause 1. The operating capital of the Cooperative Development Support Fund includes:

Point 1.1. The initial charter capital of the Cooperative Development Support Fund is 100 billion VND provided by the state budget. When there is a need to change the charter capital level, the Chairman of the Management Board of the Cooperative Development Support Fund shall propose to the Chairman of the Vietnam Union of Cooperatives and the Minister of Finance to submit to the Prime Minister for decision.

Point 1.2. Voluntary contributions from cooperatives and cooperative unions.

Point 1.3. Voluntary contributions from organizations and individuals both within and outside the country.

Point 1.4. Grants and sponsorships from organizations and individuals both within and outside the country.

Point 1.5. Capital entrusted from organizations and individuals both within and outside the country to support the development of cooperatives and cooperative unions.

Point 1.6. Capital from domestic and foreign programs and projects supporting the development of cooperatives and cooperative unions.

Point 1.7. Capital raised from organizations and individuals and other capital as prescribed by law.

Clause 2. The operating capital of the Cooperative Development Support Fund must be used for the intended purposes, effectively and safely in accordance with the objectives and tasks of the Fund as stipulated in the Decision on Establishment and the Charter on Organization and Operation of the Cooperative Development Support Fund.

Clause 3. The Ministry of Finance will allocate and provide the charter capital for the Cooperative Development Support Fund in accordance with the provisions of the State Budget Law and the implementing regulations of the State Budget Law.

Clause 4. Annually, the Cooperative Development Support Fund must balance its sources of capital and capital needs for supporting the development of cooperatives and cooperative unions; implement plans for raising capital.

Clause 5. Investment capital for basic construction and fixed asset purchases:

Point 5.1. The investment capital for basic construction and fixed asset purchases of the Cooperative Development Support Fund is formed from the following sources:

a) Existing charter capital of the Cooperative Development Support Fund;

b) State budget allocation (if any);

c) Depreciation of fixed assets;

d) Development fund and other lawful sources.

Point 5.2. Investment and purchase of fixed assets for the activities of the Cooperative Development Support Fund shall not exceed 15% of the existing charter capital of the Fund. All investment and purchase of fixed assets of the Cooperative Development Support Fund must be carried out in accordance with the regulations applicable to state-owned enterprises. Annually, the Cooperative Development Support Fund must develop an investment and fixed asset purchase plan to be reviewed and approved by the Management Board and implemented within the approved plan.

Clause 6. Inventory and revaluation of assets

Point 6.1. The Cooperative Development Support Fund must conduct inventory and revaluation of assets in the following cases:

a) Inventory and revaluation of assets as decided by the competent state authority.

b) Recovery of collateral assets when the project owner cannot repay the debt.

c) Liquidation and sale of assets.

Point 6.2. The inventory and revaluation of assets must comply with current regulations applicable to state-owned enterprises. Any increases or decreases in value due to revaluation of assets (excluding recovery of collateral assets and assets formed from Fund loans when the project owner cannot repay the debt) shall be recorded as increases or decreases in the Fund's capital according to the regulations applicable to state-owned enterprises.

Clause 7. In cases of asset losses, the Cooperative Development Support Fund must identify the causes and handle them accordingly:

Point 7.1. If the loss of assets is due to the fault of a collective or individual, the collective or individual causing the loss must compensate according to the law.

Point 7.2. If the assets were insured according to the law, they shall be handled according to the insurance contract.

Point 7.3. After implementing the measures specified in Points 7.1 and 7.2 above, if the compensation is insufficient, the remaining amount shall be included in the Fund's expenses.

Clause 8. The establishment and use of depreciation reserves for fixed assets of the Cooperative Development Support Fund shall be carried out in accordance with the guidance of the Ministry of Finance for enterprises.

Clause 9. The Cooperative Development Support Fund has the right to lease premises and assets under its management in accordance with the principles of efficiency, preservation, and development of capital as prescribed by the Civil Code and other laws.

10. The Fund for Supporting Cooperative Development may liquidate and sell off assets that are obsolete, have lost quality, are damaged and cannot be restored, or are technologically outdated and not in demand or not used effectively.

10.1. When liquidating assets, the Fund for Supporting Cooperative Development must appraise the assets and organize auctions in accordance with the provisions of the law as if it were a business enterprise.

10.2. The difference between the amount received from the liquidation or sale of assets and the remaining value of the assets on the accounting books and the costs of liquidation or sale (if any) shall be recorded as income of the Fund for Supporting Cooperative Development. In cases where the amount received from the liquidation or sale of assets is lower than the remaining value of the assets on the accounting books and the costs of liquidation or sale (if any), the difference shall be recorded as operating expenses of the Fund for Supporting Cooperative Development.

III. PROVISIONS ON THE ESTABLISHMENT OF A RISK RESERVE FUND

1. The Fund for Supporting Cooperative Development may establish a risk reserve fund to compensate losses (write-off principal) due to unforeseeable and irresistible causes (natural disasters, fires, earthquakes, epidemics...) arising during the implementation of loan projects and support with repayment of principal, which shall be recorded as business operation expenses of the Fund.

2. The level of establishment of the risk reserve fund shall be decided annually by the Management Board but shall be at least 0.2% of the annual outstanding loan balance of the Fund. The establishment shall be carried out once a year at the end of the fiscal year.

3. At the end of the year, if the risk reserve fund is not fully utilized, the surplus shall be transferred to the next year's risk reserve fund. In cases where the surplus of the risk reserve fund is insufficient to cover losses incurred in the year, the Management Board of the Fund for Supporting Cooperative Development shall report to the Vietnam Union of Cooperatives and the Ministry of Finance for consideration and decision.

IV. INCOME AND EXPENSES

1. The income of the Fund for Supporting Cooperative Development includes all actual receipts in the year generated from business operations and other services provided by the Fund, including:

1.1. Income from business operations:

a) Interest income from loans made to investment projects funded by the Fund for Supporting Cooperative Development;

b) Fees from activities providing support with repayment of principal;

c) Interest income from deposits of the Fund for Supporting Cooperative Development at the State Treasury and commercial banks;

d) Fees for agency lending services under agency agreements;

đ) Other business operation and service income.

1.2. Income from financial activities:

a) Income from interest earned on government bond trading activities;

b) Revenue from leasing assets;

c) Other income from financial services.

1.3. Income from extraordinary activities:

a) Fine income;

b) Income from the liquidation and sale of Fund for Supporting Cooperative Development assets (after deducting the remaining value and liquidation and sale costs);

c) Income from revaluation gains on collateral when the borrower fails to repay the debt, assets formed from Fund loans;

d) Recovery of previously written-off debts;

đ) Other extraordinary income.

2. Expenses of the Fund for Supporting Cooperative Development include necessary actual expenditures for the Fund's operations, supported by valid invoices and vouchers. The level of expenditure and the objects of expenditure shall be implemented in accordance with the law. In cases where the law does not provide regulations, the Fund for Supporting Cooperative Development shall base its budget standards and decisions on financial capacity and bear responsibility before the law.

Expenditures must be within the approved annual financial plan by the Management Board, including:

2.1. Business operation expenses:

a) Capital raising costs;

b) Payment service costs;

c) Agency service costs;

d) Risk reserve fund establishment costs;

đ) Costs for hiring organizations and experts to assess projects; costs for collaborating experts;

e) Other business operation costs.

2.2. Labor costs for employees directly working at the Fund for Supporting Cooperative Development:

a) Wages and allowances according to current state regulations applicable to state-owned enterprises;

b) Social insurance, health insurance contributions, and trade union fees as stipulated by state regulations;

c) Meal allowance: the monthly amount per person shall not exceed the minimum wage set by the state for workers and officials;

d) Uniform and safety equipment costs (two sets of summer uniforms and two suits for men, one cheongsam for women every year, as prescribed);

đ) Allowances for Management Board members and part-time staff; costs for hiring experts;

e) Other costs as prescribed.

2.3. Administrative costs:

a) Depreciation costs of fixed assets;

b) Costs for management and administrative activities:

- Costs for purchasing labor tools and office supplies;

- Postal and telecommunications costs including: postal charges, telecommunication, telegram, telex, fax, internet services paid according to invoices from postal authorities and service providers;

- Electricity, water, health, and office sanitation expenses;

- Fuel costs for transportation of staff on official trips as prescribed by state regulations;

- Travel expenses for staff as prescribed;

- Publicity, press conference, transaction, foreign affairs, conference, seminar costs;

- Inspection and supervision costs as prescribed;

- Maintenance and repair costs of assets;

- Training and professional development costs;

- Costs for official travel and return as prescribed by state regulations.

c) Contributions to a termination allowance reserve fund to pay termination allowances and unemployment benefits as prescribed by the state;

If the annual termination allowance reserve fund is not fully utilized, the surplus shall be transferred to the next year. In cases where the termination allowance reserve fund is insufficient to cover termination allowances for laid-off workers in the fiscal year, the entire shortfall shall be recorded as administrative costs for the period.

d) Other administrative costs as prescribed;

2.4. Financial activity costs:

a) Costs for government bond trading activities;

b) Costs for leasing assets and other financial activity costs.

2.5. Unusual expense items:

a) Costs for recovering written-off debts;

b) Expenses for collecting penalties as prescribed;

c) Asset insurance costs and other types of insurance costs as prescribed;

d) Costs from revaluation gains on collateral when the borrower fails to repay the debt, assets formed from Fund loans;

đ) Costs for supporting Party and mass organization activities of the Fund for Supporting Cooperative Development as prescribed by the state.

e) Other expenses as prescribed.

3. The Cooperative Development Support Fund shall not be accounted for in the costs of the following items:

3.1. Losses that have been supported by the Government or compensated by insurance agencies or the party causing the loss.

3.2. Administrative fines due to subjective reasons or financial system violations.

3.3. Investment costs for basic construction, procurement, upgrading, and renovation of fixed assets from investment capital.

3.4. Procurement, construction, repair, maintenance, and equipment costs for welfare assets.

4. During the first five years of operation, if the income of the Cooperative Development Support Fund is insufficient to cover costs, the Management Board of the Fund shall report to the Vietnam Union of Cooperatives and the Ministry of Finance for specific consideration and handling.

V. DISTRIBUTION OF INCOME AND USE OF FUNDS

1. Distribution of income.

The annual financial surplus, calculated as income minus reasonable and legitimate expenses, shall be distributed as follows:

1.1. Pay taxes according to current laws, excluding tax exemptions stipulated in Point 2, Section I of this Circular.

1.2. Deduct penalties for violating budget discipline and other legitimate expenses not yet deducted.

1.3. The remainder shall be allocated to the following funds:

a) Allocate 50% to the development investment fund.

b) Allocate to the reward and welfare funds. The maximum level of allocation for these two funds is equivalent to three months' salary.

c) The remaining amount after establishing the above funds shall be allocated to the reserve fund for supplementary registered capital.

2. Purpose of using funds.

2.1. The reserve fund for supplementary registered capital is used to supplement the registered capital of the Cooperative Development Support Fund.

2.2. The development investment fund is used for investment, procurement of assets, technological innovation, and improvement of working conditions for the Cooperative Development Support Fund.

2.3. The reward fund is used for:

a) Year-end or regular bonuses for staff of the Cooperative Development Support Fund. The bonus levels are determined by the Director based on labor productivity and achievements of each staff member.

b) Special bonuses for individuals or groups within the Cooperative Development Support Fund who propose technical improvements or procedural innovations leading to efficiency. The bonus levels are determined by the Fund Director.

c) Bonuses for individuals or units outside the Cooperative Development Support Fund that contribute effectively to its activities. The bonus levels are determined by the Chairman of the Management Board of the Fund.

2.4. The welfare fund is used for:

a) Investment in building or repairing welfare facilities of the Cooperative Development Support Fund, contributing capital to joint construction projects within the industry or with other units under agreed contracts.

b) Expenses for sports, cultural, and public welfare activities for the collective of staff at the Cooperative Development Support Fund.

c) Regular and emergency hardship allowances for staff of the Cooperative Development Support Fund.

d) Contributions to social welfare funds and other welfare activities.

The Director of the Cooperative Development Support Fund shall cooperate with the union committee of the Fund to manage and utilize the welfare fund.

VI. ACCOUNTING SYSTEM AND FINANCIAL PLANNING

1. The fiscal year of the Cooperative Development Support Fund begins on January 1 and ends on December 31 of the Gregorian calendar year.

2. The Cooperative Development Support Fund shall apply the accounting system of the Vietnam Development Bank for accounting purposes.

3. Annually, the Cooperative Development Support Fund shall prepare and report to the Vietnam Union of Cooperatives and the Ministry of Finance the following plans:

3.1. Annual capital plan including state budget registered capital, recovered loan capital, and other raised capital.

3.2. Capital usage plan including loan investment plan, support plan with repayment of principal, and other capital usage plans.

3.3. Financial income and expenditure plan accompanied by detailed explanations of revenue and expenditure items.

4. Periodically (every six months, annually), the Cooperative Development Support Fund shall prepare and submit financial reports to the Vietnam Union of Cooperatives and the Ministry of Finance:

4.1. The mid-year report shall be submitted no later than July 31 of the year.

4.2. The final settlement report approved by the Chairman of the Vietnam Union of Cooperatives shall be submitted to the Ministry of Finance no later than March 31 of the following year.

5. The Cooperative Development Support Fund shall be subject to financial audits by the Ministry of Finance, including:

5.1. Periodic or ad hoc audits of accounting reports and final settlement reports.

5.2. Special topic audits based on financial management requirements.

VII. IMPLEMENTATION

This Circular takes effect fifteen days after its publication in the Official Gazette. Any difficulties encountered during implementation should be reported to the Ministry of Finance for research and resolution./.