Circular No. 83/2015/TT-BTC guides the financial management regime for cooperatives

CIRCULAR

Guidelines on financial management for cooperatives

___________

Pursuant to the Law on Cooperatives No. 23/2012/QH13 dated November 20, 2012 (hereinafter referred to as the Law on Cooperatives);

Pursuant to the Accounting Law No. 03/2003/QH11 dated June 17, 2003;

Pursuant to Decree No. 215/2013/ND-CP dated December 23, 2013 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance;

Pursuant to the Government's Decree No. 193/2013/NĐ-CP dated November 21, 2013 detailing certain provisions of the Law on Cooperatives (hereinafter referred to as Decree No. 193/2013/NĐ-CP);

Based on the consensus opinion of the Ministry of Agriculture and Rural Development in Circular No. 9837/BNN-KTHT dated December 8, 2014;

The Minister of Finance hereby issues this Circular amending and supplementing certain Articles of Circular No. 133/2015/TT-BTC dated August 31, 2015, issued by the Minister of Finance guiding the financial management mechanism for the Vietnam Chamber of Commerce and Industry (hereinafter referred to as Circular No. 133/2015/TT-BTC).

The Minister of Finance issues this Circular to guide the financial management regime applicable to cooperatives and cooperative federations.

Section 1
GENERAL PROVISIONS

Article 1. Scope of Regulation and Applicability

Article 1. This Circular guides the financial management regime applicable to cooperatives and cooperative federations as prescribed in Article 2 of the Law on Cooperatives No. 23/2012/QH13 dated November 20, 2012.

Article 2. On the basis of the provisions of this Circular, cooperatives and cooperative federations shall establish internal financial management regulations suitable to their characteristics and operational conditions; these regulations shall be approved by the members' congress or member cooperatives and fully implemented in accordance with relevant laws, ensuring voluntariness, equality, transparency, democracy, and compliance with the law.

Section 2
MANAGEMENT AND USE OF CAPITAL FOR COOPERATIVES

Article 2. Registered Capital

Clause 1. The registered capital of cooperatives and cooperative federations is the total capital contributed or committed to be contributed by members of the cooperative (hereinafter referred to as members) and member cooperatives of the cooperative federation (hereinafter referred to as member cooperatives) within a specified period and recorded in the charter of the cooperative or cooperative federation. The valuation of contributed capital shall be carried out in accordance with Article 42 of the Law on Cooperatives.

Clause 2. For cooperatives and cooperative federations operating in industries or professions that require statutory capital, the registered capital must not be lower than the statutory capital required for such industries or professions.

Clause 3. Any increase or decrease in the registered capital of cooperatives and cooperative federations shall be decided by the members' congress in accordance with Article 43 of the Law on Cooperatives.

Article 3. Operating Capital of Cooperatives

Clause 1. The operating capital of cooperatives and cooperative federations includes the capital contributed by members and member cooperatives, raised capital, accumulated capital, funds of the cooperative or cooperative federation; state subsidies and support from domestic and foreign organizations and individuals; gifts and other lawful sources of income.

Clause 2. The charter and internal financial management regulations of cooperatives and cooperative federations shall specify the management and use of operating capital in accordance with the Law on Cooperatives and relevant laws.

Article 4. Raising Capital and Subsidies/Support

Clause 1. Cooperatives and cooperative federations have the right to raise capital in accordance with the law to serve production and business activities and are responsible for the effectiveness of the raised capital, and for fully repaying creditors according to the commitments in the contract.

Clause 2. Cooperatives and cooperative federations prioritize raising capital from members and member cooperatives for investment and expansion of production and business activities based on agreements with members and member cooperatives following procedures and formalities similar to those for raising capital from domestic organizations and individuals.

In cases where raising capital from members and member cooperatives does not meet the needs, cooperatives and cooperative federations may raise capital from other sources in accordance with the law and the charter of the cooperative or cooperative federation.

Clause 3. Methods of raising capital: raising capital from members and member cooperatives; borrowing from credit institutions, other financial organizations, individuals, and organizations outside the cooperative or cooperative federation, and other methods of raising capital as prescribed by law.

Clause 4. Principles of raising capital:

a) The raising of capital must be based on a plan approved by the members' congress or the board of directors, general manager (chief executive officer) in accordance with the authority delegated in the charter and internal financial management regulations of the cooperative or cooperative federation.

The person approving the capital-raising plan must ensure supervision and guarantee that the raised capital is used for its intended purpose, for the intended recipients, and effectively.

b) Borrowing from domestic economic organizations, individuals, cooperatives, and cooperative federations must be conducted through loan contracts with lending organizations and individuals in accordance with the law.

c) Raising capital from foreign organizations and individuals shall be carried out in accordance with the law on external borrowing and repayment.

Clause 5. Cooperatives and cooperative federations accept subsidies and support from the state, domestic and foreign organizations and individuals in accordance with agreements and relevant laws.

Clause 6. Management of state subsidies and support is carried out as follows:

a) Non-repayable state subsidies are included in the non-divisible assets of the cooperative or cooperative federation.

b) State support that must be repaid is included in the debt of the cooperative or cooperative federation.

Article 5. Internal Credit Activities

1. Cooperatives and Cooperative Federations may utilize idle capital of cooperatives and cooperative federations and mobilize deposits from members and member cooperatives to lend to members and member cooperatives in the form of internal credit. Cooperatives and Cooperative Federations must develop plans regarding: Mobilized funds, loaned funds, lending interest rates, deposit interest rates, physical infrastructure, and conditions for implementing internal credit activities. Develop internal credit activity regulations consistent with relevant legal documents and approved by the member assembly.

2. Cooperatives and Cooperative Federations must organize accounting records to separately track internal credit activities within the same accounting system of the entity on indicators such as loans, received deposits, and other income and expenditure activities related to internal credit activities. At the end of each month and quarter, they must inventory cash reserves and reconcile receivables and payables; manage internal credit activities according to Circular No. 06/2004/TT-NHNN dated September 27, 2004 of the State Bank of Vietnam guiding internal credit activities of cooperatives, Circular No. 04/2007/TT-NHNN dated June 13, 2007 amending and supplementing Circular No. 06/2004/TT-NHNN, any subsequent amendments, supplements, or replacements, and accounting laws.

Article 6. Capital Contribution, Purchase of Shares, Establishment of Enterprises

1. Cooperatives and Cooperative Federations shall implement capital contributions, purchase of shares, and establishment of enterprises in accordance with Article 20 of Decree No. 193/2013/NĐ-CP, consistent with corporate law, securities law, and related provisions.

2. Cooperatives and Cooperative Federations shall not use assets not owned by cooperatives and cooperative federations, such as leased assets, borrowed assets, held-in-trust assets, processed assets, consigned sale assets, and deposited assets, to contribute capital, purchase shares, or establish enterprises.

3. For capital contributions, share purchases, and enterprise establishments, cooperatives and cooperative federations may establish reserve provisions in accordance with the regulations on establishing loss reserve provisions for long-term financial investments as stipulated in Circular No. 228/2009/TT-BTC dated December 7, 2009 of the Ministry of Finance guiding the system of establishing and using reserve provisions for inventory write-downs, losses on financial investments, difficult-to-collect receivables, and product warranties at enterprises, Circular No. 89/2013/TT-BTC dated June 28, 2013 amending and supplementing Circular No. 228/2009/TT-BTC, and any subsequent amendments, supplements, or replacements.

4. The transfer of contributed capital and shares of cooperatives and cooperative federations in enterprises and the transfer of enterprises of cooperatives and cooperative federations shall be carried out in accordance with the Enterprise Law, Securities Law, and guiding, amending, supplementing, and replacing documents (if applicable). After deducting the recorded investment value on accounting books, transfer costs, and fulfilling tax obligations as prescribed, the remaining amount from the proceeds of the transfer of contributed capital and shares of cooperatives and cooperative federations shall be accounted for as business results.

Section 3
MANAGEMENT, USE AND DISPOSITION OF COOPERATIVE ASSETS

Article 7. Assets of cooperatives and cooperative unions

1. The assets of cooperatives and cooperative unions are regulated in Article 48 of the Law on Cooperatives.

2. The handling of assets and capital of cooperatives and cooperative unions when dissolved shall be carried out in accordance with the provisions of Article 49 of the Law on Cooperatives; the handling of undivided assets of cooperatives and cooperative unions when dissolved or bankrupted shall be carried out in accordance with the provisions of Decree No. 193/2013/NĐ-CP.

Article 8. Management of undivided assets

Cooperatives and cooperative unions shall establish regulations to strictly manage undivided assets. Cooperatives and cooperative unions must open books to record when receiving undivided assets.

Article 9. Management and use of fixed assets

1. Cooperatives and cooperative unions shall implement investment, construction, procurement of fixed assets in accordance with Articles 32 and 34 of the Law on Cooperatives, the charter, financial management regulations of cooperatives and cooperative unions, and relevant laws.

2. The management, use, and depreciation of fixed assets shall be conducted in accordance with the regulations for enterprises as stipulated in Circular No. 45/2013/TT-BTC dated April 25, 2013, issued by the Ministry of Finance guiding the management, use, and depreciation of fixed assets and any subsequent amendments or replacements.

3. For special business sectors with specific regulations on investment, procurement, management, and use of fixed assets according to their respective industries, in addition to implementing the aforementioned regulations, they must also comply with the regulations of specialized legal documents.

4. The liquidation, sale, and disposal of fixed assets shall be decided by the members' congress in accordance with Articles 32 and 34 of the Law on Cooperatives, the charter, financial management regulations of cooperatives and cooperative unions, and relevant laws.

5. In cases where dismantling or canceling old fixed assets is required upon approval of an investment project, the handling and accounting of old fixed assets when dismantled or canceled shall be carried out similarly to the liquidation or sale of fixed assets.

Article 10. Management of current assets

1. Current assets include various types of materials, raw materials, supplies, tools, equipment, finished products, goods, semi-finished products, work-in-progress, cash reserves, bank deposit balances, stocks, bonds held in reserve.

2. The management of current assets must adhere to the following principles:

a) Cooperatives and cooperative unions shall establish regulations to strictly manage current assets. Cooperatives and cooperative unions must open books to closely monitor cash inflows and outflows, deposits, stocks, bonds, foreign currencies, and accurately reflect all receipts and expenditures, complying with cash management regulations. Monthly cash inventory checks and bank account balance reconciliations must be conducted.

b) All entries and exits from warehouses must be fully documented and recorded in relevant ledgers (warehouse entry and exit forms; material and product warehouse ledgers).

c) The original cost of externally purchased current assets: Is the purchase price plus transportation costs, storage fees, insurance premiums, selection and recycling costs (if applicable), related taxes and fees (excluding refundable taxes).

d) The original cost of self-manufactured current assets: Is the cost of materials withdrawn from stock plus actual expenses incurred during the manufacturing process.

đ) The original cost of outsourced processed materials: Is the actual cost of materials withdrawn for processing plus processing fees, transportation costs, and loading/unloading fees.

e) The total value of current assets already used must be included in the cost of the usage object within the production and service period of the cooperative or cooperative union.

g) In cases where tools and equipment with significant value and a usage period of one year or more are used, the costs should be allocated over multiple production periods but not exceeding three years at most.

3. The transfer, liquidation, and disposal of current assets of cooperatives and cooperative unions shall be decided by the board of directors within the authority granted by the members' congress, in accordance with the charter, financial management regulations of cooperatives and cooperative unions, and relevant laws.

4. Cooperatives may account for provisions for reduction in value of inventory in accordance with Circular No. 228/2009/TT-BTC dated December 7, 2009, issued by the Ministry of Finance, Circular No. 89/2013/TT-BTC dated June 28, 2013 amending and supplementing Circular No. 228/2009/TT-BTC dated December 7, 2009, and any subsequent amendments or replacements.

Article 11. Inventory of Assets

1. Cooperatives and cooperative unions must organize regular or extraordinary inventory to determine the quantity of assets (fixed assets and long-term investments, current assets and short-term investments, undivided assets) in the following cases: When closing accounting books to prepare annual financial reports; when implementing decisions on division, separation, merger, consolidation, dissolution, bankruptcy; after natural disasters, epidemics; or for other reasons causing asset fluctuations; or as prescribed by law. Statistics of excess and shortage of assets, identify causes, responsibilities of relevant organizations and individuals, and determine material compensation according to regulations.

2. Handling of inventory

a) Handling loss of assets after inventory

Asset loss is defined as missing, shortage, damage, deterioration, loss of quality, obsolescence in fashion or technology, and overstock identified in regular and extraordinary inventory. Cooperatives and cooperative unions must determine the value of the loss, cause, responsibility, and handle as follows:

- If due to subjective reasons, the person causing the loss must compensate according to the law. The member assembly or the authority at the level specified in the charter and financial management regulations decides the amount of compensation according to the law and is responsible for their decision.

- Insured assets, if there is a loss, shall be handled according to the insurance contract.

- The value of the lost asset after compensating with personal, collective, or insurance organization funds, if still insufficient, shall be covered by the company's financial reserve fund. In case the financial reserve fund is insufficient, the shortfall shall be recorded as production and business expenses for the period.

- For special cases caused by natural disasters, epidemics, fires, and other force majeure events resulting in serious losses that cooperatives and cooperative unions cannot overcome themselves, they must develop a plan to handle the loss and submit it to the member assembly. The member assembly decides on handling the loss according to the law and is responsible for its decision.

b) Excess assets after inventory

Excess assets after inventory are the differences between the actual assets counted and those recorded in accounting books. Excess assets after inventory must clearly identify the cause and be reviewed and handled based on the decision of the competent authority. In cases where the value of excess assets cannot be determined and the owner cannot be found, they shall be recorded as other income of the cooperative or cooperative union.

Article 12. Revaluation of Assets

1. Cooperatives and cooperative unions shall conduct revaluation of assets in the following cases:

a) According to the decision of the competent state agency.

b) Using assets to contribute capital, purchase shares, establish a business.

c) Converting to another form of economic organization.

d) Division, separation, merger, consolidation, dissolution, bankruptcy.

đ) Other cases as prescribed by law.

2. The revaluation of assets must comply with the provisions of the law. Any increases or decreases in value due to revaluation of assets as stipulated in Clause 1 of this Article shall be implemented according to specific regulations for each case.

Section 4
MANAGEMENT OF RECEIVABLES AND PAYABLES

Article 13. Management of Receivables

1. The receivables of cooperatives and cooperative unions include:

a) Receivables from members and member cooperatives: The value of products, goods, and services sold or provided to members and member cooperatives but not yet paid.

b) Receivables from customers: The value of products and services sold or provided to customers by cooperatives and cooperative unions but not yet paid.

c) Receivables from internal credit activities: The amount of internal loans granted within cooperatives and cooperative unions (both principal and interest).

d) Other receivables as prescribed by law.

2. Cooperatives and cooperative unions must maintain detailed records for each debtor, according to the nature of the debt and each payment made; regularly classify debts (current debts, difficult-to-collect receivables, unrecoverable debts); urge the recovery of debts. For receivables in kind, cooperatives and cooperative unions must monitor both the physical items and their values to preserve capital when prices fluctuate.

For receivables from customers with regular business relationships, periodic checks and reconciliations of receivables, payments received, remaining amounts, and confirmation of debts with cooperatives and cooperative unions in writing must be conducted.

3. At the end of the accounting period each year, based on receivables determined as difficult-to-collect receivables, cooperatives and cooperative unions must establish provisions for difficult-to-collect receivables according to Circular No. 228/2009/TT-BTC dated December 7, 2009 of the Ministry of Finance, Circular No. 89/2013/TT-BTC dated June 28, 2013 amending and supplementing Circular No. 228/2009/TT-BTC dated December 7, 2009, and other amended, supplemented, or replaced documents (if any).

4. Cooperatives and cooperative unions periodically or unexpectedly reconcile receivables in the following cases: When closing the books to prepare annual financial reports; when implementing decisions on division, separation, merger, consolidation, dissolution, bankruptcy; or as prescribed by law. Statistics on uncollectible debts, overdue debts, and determination of causes, responsibilities of related organizations and individuals, and material compensation levels must be established.

5. For receivables that cannot be recovered, cooperatives and cooperative unions have the responsibility to handle compensation from related individuals and groups, and the remaining amount shall be handled in the following priority order:

a) Offset by the provision for difficult-to-collect receivables;

b) Offset from the financial reserve fund;

c) Recorded as production and business expenses in the current year. In case of recording as business expenses resulting in losses for cooperatives and cooperative unions, such losses may be carried forward to the next year according to tax laws.

After handling as above, uncollectible receivables still need to be monitored outside the balance sheet account and efforts to recover them must be organized. Recovered amounts shall be recorded as other income of cooperatives and cooperative unions.

Article 14. Management of Payables

1. Payables arise from borrowing or transactions involving the purchase of materials, products, goods, and services and must be classified according to the debtor and the nature of the debt, including: Payables to financial institutions, payables to sellers, payable taxes to the State, payables to members and member cooperatives, payables to employees, and other payables and taxes payable.

2. Cooperatives and cooperative unions must maintain detailed records of all payables according to each creditor, the content of the loan, the loan term, and each payment made.

3. Payables must be settled according to the agreed deadlines. Regularly review, assess, and analyze the ability to settle debts, detect early difficulties in debt settlement to promptly address them and prevent the occurrence of overdue payables. Payables that do not need to be paid or have no debtor to pay shall be recorded as income.

Article 15. Management, monitoring, and settlement of advances

1. An advance is a sum of money that a cooperative or cooperative federation provides in advance to staff or members for the implementation of tasks approved.

2. The monitoring and accounting of advances shall be carried out in accordance with the following provisions:

a) The person receiving the advance must be a staff member or member of the cooperative or cooperative federation.

b) The request for an advance must clearly state the name, address (unit, department), and amount requested, the reason for the advance, the purpose of using the advance funds, the payment time, specifying the date for repayment of the advance amount, and must be signed off by the authorized person according to the classification at the charter, financial management regulations. The accountant prepares a payment voucher attached to the advance request form and transfers it to the cashier for disbursement.

c) The advance must be settled immediately upon completion of the work. If the payment is delayed beyond the date specified on the advance request form, the person receiving the advance and the accountant responsible for monitoring the advance will bear responsibility according to the financial management and accounting regulations of the cooperative or cooperative federation.

d) The person receiving the advance must use the funds for the purposes stated on the advance request form, settle the amount within the deadline, and provide all original supporting documents. A person who has not settled the previous advance amount may not receive another advance.

đ) The cooperative or cooperative federation must maintain a detailed record of advances for each recipient and each advance transaction, including the settlement of advances.

Article 16. Management of taxes payable and financial obligations to the State

Cooperatives and cooperative federations must comply fully with tax laws. They must monitor the amounts payable, paid, and still due for each tax and financial obligation to the State in detail.

Article 17. Management of payments to members and employees

1. Payments to members and employees of cooperatives and cooperative federations include wages, interest, and other amounts that the cooperatives or cooperative federations must pay.

2. Cooperatives and cooperative federations must maintain detailed records for each individual and each payment amount. For payments made in kind, detailed records must be kept of the quantity, unit price, and total amount payable. At the same time, cooperatives and cooperative federations must maintain detailed settlement records with members to ensure transparency in financial matters and implement democratic regulations for members, without settling through teams or groups.

Section 5
MANAGEMENT OF REVENUE AND EXPENSES

Article 18. Principles for managing revenue, other income, and expenses

1. The Board of Directors and General Director of cooperatives and cooperative federations are responsible before members, member cooperatives, and the law, ensuring strict management to guarantee the accuracy and legality of all revenue, other income, and production and business operation expenses.

2. All revenue, other income, and production and business operation expenses of cooperatives and cooperative federations arising must have complete legal invoices and supporting documents as required by law and must be fully, promptly, accurately, and truthfully reflected in the cooperative's or cooperative federation's accounting books and financial reports in accordance with accounting laws.

3. Revenue and income are determined in Vietnamese Dong; in cases where income is received in foreign currency, it must be converted to Vietnamese Dong according to legal provisions.

4. Cooperatives and cooperative federations must correctly and fully account for production and business operation expenses, covering all expenses from cooperative revenues and bearing full responsibility for the results of their business operations.

5. The determination of revenue and expenses for calculating corporate income tax payable shall be carried out in accordance with the provisions of the Corporate Income Tax Law.

Article 19. Management of Revenue and Other Income

1. The revenue and other income of cooperatives and cooperative federations shall be determined in accordance with the provisions of the accounting and tax laws.

2. Revenue includes production and business activity revenue and financial and internal credit activity revenue, including:

a) Production and business activity revenue is the total value of products and services that the cooperative or cooperative federation has sold or provided to members, member cooperatives, and customers, which have been paid for or accepted by members, member cooperatives, and customers, including:

- Revenue from production and business activities for members and member cooperatives.

- Revenue from production and business activities for non-member customers.

- Cooperatives and cooperative federations must separately account for and monitor these two types of revenue.

b) Financial and internal credit activity revenue includes: revenues arising from royalties, fees for the use of cooperative assets by others, interest from lending capital, deposit interest, deferred payment interest, installment payment interest, financial leasing interest; foreign exchange rate interest, including interest from selling foreign currency; proceeds from transferring investment capital in enterprises; profits and dividends distributed from equity contributions and share purchases; interest from internal credit activities. In cases where distributed profits have already been subject to corporate income tax, cooperatives and cooperative federations are not required to pay corporate income tax on such distributed profits.

3. Other income includes proceeds from the liquidation and sale of fixed assets, insurance compensation payments, increases in income from debts that no longer have creditors; customer penalties due to breach of contract, intellectual property and copyright values accepted by capital contributors, recorded as other income of cooperatives and cooperative federations, and other receipts as prescribed by law.

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

5. All revenue generated during the period must be supported by invoices and other documents and must be fully and promptly reflected in the accounting books in accordance with the accounting laws.

6. Cooperatives and cooperative federations must separately track and account for revenue exempted or reduced from corporate income tax.

7. Items that cannot be accounted for as revenue include:

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

b) State support funds (in cash or kind) for investment development to form infrastructure assets and other fixed assets. After receiving the assets for management and use, they should be recorded as undistributed assets of the cooperative or cooperative federation.

c) Other non-reimbursable state subsidies; gifts and donations agreed to be undistributed assets;

d) At the time of preparing the final report, if the cooperative or cooperative federation has issued sales invoices and collected payment but not yet delivered the goods, the amount collected should not be recorded as revenue, but rather as a prepayment from customers.

Article 20. Management of Costs

The costs of production and business activities of cooperatives and cooperative unions are expenses arising from production and business operations within the fiscal year. The determination of costs shall be carried out in accordance with the provisions of the Accounting Law and Tax Law; production and business activity costs include the following contents:

1. Production and Business Costs:

a) Raw material, fuel, power, semi-finished product, and external service purchase costs (based on actual consumption and original cost), tool and equipment depreciation costs, major repair costs for fixed assets, advance expense costs, and large-scale repair costs for fixed assets.

b) Depreciation costs of fixed assets as prescribed by law.

c) Wages, salaries, and other wage-like costs payable to members and employees according to the guidelines of the Ministry of Labor, Invalids, and Social Affairs (in cases where payment is made in kind, it shall be converted into monetary value).

d) Social insurance premiums, unemployment insurance premiums, trade union fees, and health insurance premiums for employees that cooperatives and cooperative unions must pay as prescribed by law.

đ) Transaction, brokerage, hospitality, marketing, trade promotion, advertising, meeting costs calculated based on actual expenses incurred and in accordance with the Corporate Income Tax Law.

e) Other monetary costs as prescribed by law:

- Taxes, fees, and charges as prescribed by law included in the production and business costs of cooperatives and cooperative unions;

- Land rental payments;

- Severance pay for laid-off workers;

- Training to enhance management capabilities and skills of employees;

- Health care costs;

- Awards for innovation improvements, increased productivity, and cost savings. The award amount is determined by the director (general director) of the cooperative or cooperative union based on the effectiveness of the work performed but shall not exceed the cost savings generated by such work within one year;

- Costs for female workers;

- Environmental protection costs;

- Meal costs for workers;

- Other monetary costs.

g) Actual loss value of assets as stipulated in Clause 2, Article 11; unrecoverable receivables as stipulated in Clause 5, Article 13; this Circular.

h) Value of inventory write-down reserves; bad debt reserves; investment financial loss reserves; warranty product, goods, and construction project reserves; advance warranty product costs; other reserves as prescribed by law for cooperatives and cooperative unions operating in special sectors.

i) Financial activity costs, including: costs related to capital contributions, purchasing shares, establishing enterprises (including costs that capital contributors must bear themselves, including losses shared from the invested enterprise); transferred contribution value; interest payable due to capital raising; exchange rate difference losses arising during the period, exchange rate difference losses when revaluing foreign currency items at the end of the fiscal year; discounting payment costs; leasing asset costs; long-term investment write-down reserves; internal credit activity costs.

2. Other Costs, including:

a) Fixed asset disposal and sale costs (including auction costs for disposal activities); remaining value of disposed and sold fixed assets (if any); remaining value of dismantled fixed assets.

b) Losses from revaluation of materials, goods, and fixed assets contributed to subsidiaries, joint ventures, associated companies, and other long-term investments.

c) Costs for recovering written-off accounts receivable.

d) Costs to collect fines.

đ) Costs of contractual breach penalties.

e) Other costs as prescribed by law.

3. Items of expenditure not deductible when determining taxable income shall be implemented in accordance with the Corporate Income Tax Law and guiding documents.

Chapter 6
INCOME DISTRIBUTION

Article 21. Distribution of Income

The distribution of income of cooperatives and cooperative unions shall be carried out in accordance with Article 46 of the Law on Cooperatives and in the following sequence:

1. Covering losses from previous years as stipulated in the Corporate Income Tax Law.

2. Paying taxes in accordance with tax laws.

3. Covering losses from previous years that have exceeded the allowable period for deduction from taxable income.

4. Deducting administrative fines imposed on the cooperative or cooperative union.

5. The remaining income shall be distributed as follows:

a. Establishing mandatory funds as prescribed, including the Development Investment Fund and the Financial Reserve Fund. The annual ratio for establishing these two funds shall be decided by the member assembly but must not be lower than the ratio prescribed in Article 46 of the Law on Cooperatives. The establishment of the reward fund, welfare fund, and other funds shall be decided by the member assembly based on the conditions of the cooperative or cooperative union.

b. The remaining income shall be distributed to members and member cooperatives according to the charter or the decision of the member assembly on the following principles:

- Primarily based on the degree of use of products and services by members and member cooperatives; based on the labor contribution of members to the cooperative in creating jobs.

- The remainder shall be distributed according to capital contributions.

- The specific ratio and method of distribution shall be implemented according to the cooperative's or cooperative union's charter.

Article 22. Handling Losses

Losses of cooperatives and cooperative unions shall be handled in accordance with Article 50 of the Law on Cooperatives 2012.

Article 23. Purposes of Funds

1. Development Investment Fund: For expanding production and business scale or deepening investment for the cooperative or cooperative union.

2. Financial Reserve Fund: To cover losses due to force majeure causes; to handle asset losses and uncollectible receivables as prescribed and to cover operating losses.

3. Reward Fund as prescribed in the charter or decided by the member assembly shall be used for:

a) Year-end or regular bonuses based on the productivity and work achievements of each staff member within the cooperative or cooperative union.

b) Special bonuses for individuals or groups within the cooperative or cooperative union.

c) Bonuses for individuals or units outside the cooperative or cooperative union who have made significant contributions to the activities of the cooperative or cooperative union.

d) Other bonuses as decided by the member assembly.

The bonus levels specified in points a, b, c, and d of this clause shall be decided by the director (general director). Specifically, the year-end bonus as stipulated in point a of this clause requires the opinion of the cooperative union's trade union before making the decision.

4. Welfare Fund as prescribed in the charter or decided by the member assembly shall be used for:

a) Investing in building or repairing welfare facilities of the cooperative or cooperative union.

b) Spending on welfare activities for member collectives and workers within the cooperative or cooperative union.

c) Contributing part of the capital to invest in common welfare projects within the industry or with other units under contracts.

d) Using part of the welfare fund to provide emergency assistance to members and workers, including those who have retired, lost their strength, fallen into difficult circumstances, have no place to rely on, or engage in social charity work.

The use of the welfare fund shall be decided by the member assembly after consulting the opinion of the cooperative union's trade union.

5. For other funds: The member assembly decides on the establishment of these funds and clearly defines their usage in the charter and financial management regulations of the cooperative or cooperative union.

Section 7
FINANCIAL REPORTS AND AUDITING

Article 24. Financial Reports:

1. At the end of each accounting year, cooperatives and cooperative federations shall be responsible for preparing and submitting financial reports in accordance with the accounting regulations issued by the Ministry of Finance applicable to cooperatives and cooperative federations, to the registration authority for cooperatives, the Department of Finance and Planning under the People's Committee of the district, the Tax Revenue Office (district, county), the Department of Business Finance under the provincial Department of Finance.

2. The People's Committee of the district shall be responsible for compiling the financial reports of cooperatives within its jurisdiction and sending them to the Provincial Department of Planning and Investment. The Provincial Department of Planning and Investment shall take the lead and coordinate with relevant agencies to compile and analyze the business operation situation of cooperatives and cooperative federations, and send these reports to the Ministry of Planning and Investment, the Ministry of Finance (Enterprise Finance Department) and the People's Committees of centrally governed cities and provinces.

Article 25. Financial Transparency:

1. In addition to financial reports required by laws on accounting, the chairman of the management board of cooperatives and cooperative federations shall be responsible for publicly disclosing the annual financial situation to members, member cooperatives, 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 income distribution and loss handling.

- Debts within the cooperative and cooperative federation: Old debts, newly generated debts, overdue debts, due debts, and difficult-to-collect receivables.

- Results of asset inventory and capital of the cooperative and cooperative federation.

2. Forms and deadlines for financial transparency

a) Financial transparency shall be carried out through the following forms:

- Publishing printed materials;

- Notifying by written notice;

- Posting notices;

- Other forms as prescribed by law.

b) Cooperatives and cooperative federations must disclose their financial status within ninety days from the end of the accounting year.

Article 26. Transfer of Financial Management Duties:

When transferring duties between the previous term management board and the succeeding term management board, or between the previous term management board chair and the succeeding term management board chair, or between the previous term chief accountant and the new chief accountant, a handover record must be prepared, confirmed by the supervisory board and supervisors of the cooperative and cooperative federation, and comply with legal regulations on property and financial management systems. The previous term management board, management board chair, and chief accountant shall be responsible for their respective tasks; the succeeding term management board, management board chair, and chief accountant shall inherit the lawful rights and responsibilities for managing the cooperative's finances and assets from the date of receiving the transfer.

Article 27. Financial Accounting Audits:

1. The chief accountant of cooperatives and cooperative federations shall be responsible for regularly auditing internal accounting work.

2. The supervisory board and supervisors shall be responsible for monitoring and auditing (internal audit) financial and accounting activities according to the law and the charter of the cooperative and cooperative federation; auditing and controlling the standards for managing and using materials, assets, capital, and funds; managing income and expenditure and income distribution; auditing the implementation of financial plans, compliance with state financial, accounting, and statistical policies and regulations.

3. The Department of Finance and Planning under the People's Committee of the district shall have the responsibility to guide and inspect the compliance with financial and accounting systems of cooperatives and cooperative federations.

Article 28. Management of documents and vouchers

Cooperatives and cooperative unions must implement the system of managing, retaining documents, vouchers, financial records, and accounting records in accordance with relevant laws.

Section 8
IMPLEMENTATION

Article 29. Effective Date

1. This Circular takes effect from July 15, 2015, and replaces Circular Joint No. 74/2008/TTLT-BTC-BNNPTNT dated August 14, 2008, of the Ministry of Finance and the Ministry of Agriculture and Rural Development on guiding the financial management regime in agricultural cooperatives.

2. Based on the guidance provided in this Circular, the management board of cooperatives and cooperative unions shall develop internal financial management regulations for cooperatives and cooperative unions to be submitted to the members' congress for approval and implementation.

3. The Department of Corporate Finance under the Ministry of Finance has the responsibility to direct the Departments of Finance. The Departments of Finance shall regularly provide guidance and inspect the implementation of the financial management regime for cooperatives and cooperative unions as prescribed by law.

4. In case of difficulties during implementation, units shall report to the Ministry of Finance for research and resolution./.