Circular No. 85/2012/TT-BTC guiding the financial management regime for the Forest Protection and Development Fund

CIRCULAR

Guidelines for financial management

of the Forest Protection and Development Fund

Pursuant to Decree No. 60/2003/NĐ-CP dated June 10, 2003 of the Government detailing and guiding the implementation of the State Budget Law;

Pursuant to Decree No. 05/2008/NĐ-CP dated January 14, 2008 of the Government on the Forest Protection and Development Fund;

Pursuant to Decree No. 99/2010/NĐ-CP dated September 24, 2010 of the Government on policies for payment for forest environmental services;

Implementing Decision No. 07/2012/QĐ-TTg dated February 8, 2012 of the Prime Minister promulgating certain policies to strengthen forest protection work;

Considering the proposal of the Director of the Department of Administrative and Public Financial Affairs;

The Minister of Finance hereby issues guidelines for financial management of the Forest Protection and Development Fund as follows:

Article 1. General Provisions

1. These Circulars provide guidelines for financial management of the Central Forest Protection and Development Fund established and managed by the Ministry of Agriculture and Rural Development (hereinafter referred to as the Central Fund); the Chairman of the People's Committee at provincial level decides to establish the Provincial Forest Protection and Development Fund (hereinafter referred to as the Provincial Fund).

For communes with forests and sources of income as stipulated in Clause 1 and Points b, c, d of Clause 3 of Article 3 of Decision No. 07/2012/QĐ-TTg, the Commune Forest Protection and Development Fund (hereinafter referred to as the Commune Fund) may be established; the Chairman of the People's Committee at provincial level decides to establish the Commune Forest Protection and Development Fund in accordance with regulations.

2. The Fund is an independent accounting unit, allowed to open accounts at State Treasury (to receive funds from the State Budget, mandatory contributions as prescribed in Article 10 of Decree No. 05/2008/NĐ-CP, Clause 3 of Article 3 of Decision No. 07/2012/QĐ-TTg and other funds from the state budget), commercial banks.

The Fund operates without profit motive but must ensure the preservation of initial state capital; the Fund must ensure transparency, proper use according to its purpose and in compliance with the law.

3. The Fund shall implement financial management regimes as prescribed in this Circular and related legal documents.

4. The Management Board of the Central Fund is responsible to the Minister of Agriculture and Rural Development; the Management Boards of the Provincial and Commune Funds are responsible to the Chairman of the People's Committee at provincial level and relevant state management agencies for compliance with financial management regimes.

Article 2. Provisions on the sources of finance of the Forest Protection and Development Fund

1. Central Fund:

a) Initial support from the central budget when established amounting to 100 billion VND and provided over two years;

b) Entrusted financial resources:

- Payments for forest environmental services as prescribed in Decree No. 99/2010/NĐ-CP and guiding documents;

- Entrusted funds from international organizations; domestic and foreign organizations and individuals under entrustment contracts related to forest protection and development;

c) Voluntary contributions from international organizations; domestic and foreign organizations and individuals;

d) Program and project funds with provisions for repayment to the Fund;

đ) Interest from deposits in credit institutions;

e) Other lawful financial sources as prescribed by law.

2. Provincial Fund:

a) Initial support from local budgets when establishing the Fund. The specific level of support is determined by the People's Committee at provincial level;

b) Entrusted financial resources:

- Payments for forest environmental services as prescribed in Decree No. 99/2010/NĐ-CP and guiding documents;

- Entrusted funds from international organizations; domestic and foreign organizations and individuals under entrustment contracts related to forest protection and development;

c) Mandatory contributions as prescribed in Article 10 of Decree No. 05/2008/NĐ-CP dated January 14, 2008 of the Government on the Forest Protection and Development Fund, including:

- Contributions from forest owners during logging and wood trading in the following cases: Economic organizations assigned production forests by the state without land use fees; Economic organizations assigned production forests by the state with land use fees or transferred forests where the land use fees or transfer fees have been paid from the state budget; Households and individuals assigned production forests by the state without land use fees.

- Contributions from businesses operating landscapes, resorts, ecological and environmental services in forests.

- Contributions from investment projects requiring forest clearance and replanting but lacking conditions.

Contribution levels, contributors, exemptions; agencies and organizations responsible for collecting contributions according to regulations of the Ministry of Agriculture and Rural Development.

d) Voluntary contributions from international organizations; domestic and foreign organizations and individuals;

đ) Program and project funds with provisions for repayment to the Fund;

e) Support from the Central Fund;

g) Interest from deposits in credit institutions;

h) Other lawful financial sources as prescribed by law.

3. Commune Fund:

a) Local budget support to ensure regular expenditures for forest management and protection as prescribed in Clause 1 of Article 3 of Decision No. 07/2012/QĐ-TTg;

b) Revenue from administrative penalties in forestry management, forest protection, and timber management within the authority of the People's Committee at commune level, deposited into the state budget as prescribed in Point a of Clause 4 of Article 40 of Decree No. 99/2009/NĐ-CP dated November 2, 2009 on administrative penalties in forestry management, forest protection, and timber management, after deducting current national and local expenditures, returned to the Commune Forest Protection Fund;

c) Support from forest owners during logging and wood trading, landscape, resort, and eco-tourism businesses; domestic and foreign organizations and individuals;

d) Other revenues (if any) as prescribed by law.

Article 3. Contents of expenditures from the Forest Protection and Development Fund

1. Central Fund:

a) Expenditures to fulfill entrusted tasks:

- Payment for entrusted forest environmental services in accordance with Decree No. 99/2010/NĐ-CP and guiding documents;

- Expenditures to fulfill other entrusted tasks according to entrusted contracts;

The entrusted capital for assigned tasks and entrusted contracts must be tracked and managed separately. Annually (or upon completion of the entrusted contract), the Fund is responsible for settling accounts with the entrusting party (or the agency tasked with managing the entrusted task) in accordance with regulations.

b) Support for programs, projects, or non-project activities:

Based on the financial resources of the Central Fund, the contents of programs, projects, or non-project activities (collectively referred to as tasks), the Fund shall consider providing funding support for the implementation of these tasks appropriately, including:

- Supporting funds to prevent illegal logging and the production, trading, and transportation of illegally sourced timber products;

- Propaganda, dissemination, and implementation of policies and laws on forest protection and development;

- Testing and disseminating models for forest protection and development, sustainable forest management;

- Testing and applying new tree species;

- Supporting scattered tree planting;

- Developing non-timber forest products on forest land;

- Training human resources for forest protection and development at the provincial level;

The procedures, formalities, conditions, subjects eligible for full or partial non-repayable support; the amount of support, repayment period for the support, and cases eligible for exemption or reduction of the repayment amount for each task shall be in accordance with the regulations of the Ministry of Agriculture and Rural Development.

c) Supporting Provincial Funds: Based on the request of the Provincial Fund, and based on the financial resources of the Central Fund, the Management Board of the Central Fund shall consider submitting to the Ministry of Agriculture and Rural Development for support to the Provincial Fund to implement programs and projects within the scope of local tasks.

2. Provincial Fund:

a) Expenditures to fulfill entrusted tasks:

- Payment for entrusted forest environmental services in accordance with Decree No. 99/2010/NĐ-CP and guiding documents;

- Expenditures to fulfill other entrusted tasks according to entrusted contracts;

The entrusted capital for assigned tasks and entrusted contracts must be tracked and managed separately. Annually (or upon completion of the entrusted contract), the Fund is responsible for settling accounts with the entrusting party (or the agency tasked with managing the entrusted task) in accordance with regulations.

b) Support for programs, projects, or non-project activities;

Based on the financial resources of the Provincial Fund, the contents of programs, projects, or non-project activities (collectively referred to as tasks), the Fund shall consider providing funding support for the implementation of these tasks appropriately, including:

- Supporting funds to prevent illegal logging and the production, trading, and transportation of illegally sourced timber products;

- Propaganda, dissemination, and implementation of policies and laws on forest protection and development;

- Testing and disseminating models for forest protection and development, sustainable forest management;

- Testing and applying new tree species;

- Supporting scattered tree planting;

- Developing non-timber forest products on forest land;

- Training human resources for forest protection and development at the grassroots level.

The procedures, formalities, conditions, subjects eligible for full or partial non-repayable support; the amount of support, repayment period for the support, and cases eligible for exemption or reduction of the repayment amount for each type of program, project, or non-project activity shall be in accordance with the regulations of the People's Committee of the province or the agency authorized by the People's Committee of the province.

3. Commune-level Fund

- Regular expenditure for forest management and protection work as stipulated in Clause 1, Article 3 of Decision No. 07/2012/QĐ-TTg;

- Fuel expenses for patrol and inspection vehicles;

- Allowance for individuals mobilized to prevent illegal logging and forest fires; support for individuals mobilized to participate in preventing illegal logging and forest fires who suffer accidents;

- Night shift allowance, overtime allowance, and concurrent duty allowance;

- Dissemination, propaganda, legal education, and training and professional development in forest management and protection;

- Conferences, seminars for mid-term and final reviews, and commendation activities.

- Other expenses (if any).

Article 4. Provisions on financial management for the operation of the Fund

1. Central Fund:

a) Sources of operating funds for the Fund's organizational structure:

- Funds to implement entrusted forest environmental service tasks as prescribed in Decree No. 99/2010/NĐ-CP and guiding documents;

- Entrusted fees according to the entrusted contract;

- Interest from deposits of the Fund's operating funds;

- Other lawful financial sources as prescribed by law.

b) Expenditures for the Fund's organizational structure:

- Regular expenditures:

Management expenses: Salaries, allowances, and contributions for members of the Fund Management Board, the Fund Supervisory Board, and the Fund Executive Board; Postal and communication expenses; Fuel, electricity, and water expenses; Travel expenses, conference expenses; Regular maintenance expenses for assets as currently prescribed by the state.

Operational expenses: Expenses for program and project evaluation; Payment service fees; Inspection expenses; Information, publicity, and promotion expenses; Entrusted service expenses.

Other expenses (if any).

- Irregular expenditures: Training and seminar expenses; Large-scale asset procurement and repair expenses for the Fund's organizational structure; Other expenses (if any).

c) Expenditure levels: The expenditure levels for operational activities and management shall be implemented according to current regulations. In cases where the law does not specify expenditure levels, the Fund shall base its expenditure levels on its financial capacity, decide on expenditures, and bear responsibility under the law.

d) Financial mechanism of the Fund: The Fund shall operate according to the financial mechanism for public service units as currently prescribed.

2. Provincial Fund:

a) Sources of operating funds for the Fund's organizational structure:

- Funds to implement entrusted forest environmental service tasks as prescribed in Decree No. 99/2010/NĐ-CP and guiding documents;

- Entrusted fees according to the entrusted contract;

- Interest from deposits of the Fund's operating funds;

- Other lawful financial sources as prescribed by law.

b) Expenditures for the Fund's organizational structure:

- Regular expenditures:

Management expenses: Salaries, allowances, and contributions for members of the Fund Management Board, the Fund Supervisory Board, and the Fund Executive Board; Postal and communication expenses; Fuel, electricity, and water expenses; Travel expenses, conference expenses; Regular maintenance expenses for assets as currently prescribed by the state.

Operational expenses: Expenses for program and project evaluation; Payment service fees; Entrusted service expenses; Information, publicity, and promotion expenses; Inspection, supervision, acceptance, and assessment expenses for forests; Audit expenses (if any).

Other expenses (if any).

- Irregular expenditures: Training and seminar expenses; Technical support for monitoring the quality of forest environmental services; Support for activities related to payment for forest environmental services at the district and commune levels; Expenses for organizations authorized to collect mandatory contributions for the Fund; Large-scale asset procurement and repair expenses for the Fund's organizational structure; Other expenses (if any).

c) Expenditure levels: The expenditure levels for operational activities and management shall be implemented according to current regulations. In cases where the law does not specify expenditure levels, the Fund shall base its expenditure levels on its financial capacity, decide on expenditures, and bear responsibility under the law.

d) Financial mechanism of the Fund: The Fund shall operate according to the financial mechanism for public service units as currently prescribed.

3. Commune Fund:

Based on the tasks, powers, organizational structure, and financial capacity of the commune-level Fund, the provincial People's Committee shall stipulate the operations of the commune-level Fund's organizational structure (operating funds, expenditure items, expenditure levels, financial mechanisms).

Article 5. Conditions for Programs, Projects, and Non-project Activities to Receive Support

1. Programs, projects, or non-project activities must be decided upon by the competent authority;

2. Organizations receiving support must have staff with forestry expertise and experience in implementing programs, projects, or non-project activities supported by the Fund;

3. Households, individuals, or village communities receiving support must have the civil capacity to carry out programs, projects, or non-project activities supported by the Fund;

4. There must be a commitment to fully or partially repay the capital according to the provisions of the authority establishing the Fund.

Article 6. Provisions on Establishing Reserves for Provincial Funds

1. Provincial funds shall establish a reserve not exceeding 5% of the total entrusted funds transferred to provincial forest protection and development funds and other legitimate sources of funding; to support households, individuals, and communities assigned or contracted to protect forests stably over the long term in cases of natural disasters or droughts. The annual level of reserve establishment shall be determined by the People's Committee of the province.

The maximum balance of the reserve fund shall equal 5% of the entrusted service fees for environmental protection and other legitimate sources of funding reported in the year.

2. In cases where natural disasters or droughts occur within the local area; the Director of the Fund shall base on the availability of reserve resources and the situation of natural disasters and droughts to formulate assistance plans for organizations, households, individuals, and communities assigned or contracted to protect forests stably over the long term, and submit them to the competent authority for decision.

3. Any remaining balance from the above reserve fund in a given year that is not used shall be carried forward to the next year to continue supporting households, individuals, and communities assigned or contracted to protect forests stably over the long term in cases of natural disasters or droughts; it shall not be used for other purposes.

Article 7. Financial Planning and Final Accounts of the Fund

1. Central Fund:

a) Establishment of budget estimates:

Annually, the Central Fund shall prepare a financial plan for income and expenditure of the Fund, report it to the Ministry of Agriculture and Rural Development for approval to have a basis for implementation:

- Income Plan: Detailed according to each type of income stipulated in Clause 1, Article 2 (including central budget support funds when established in the first two years) and Point a, Clause 1, Article 4 of this Circular)

- Expenditure Plan: Detailed according to each type of expenditure stipulated in Clause 1, Article 3 and Point b, Clause 1, Article 4 of this Circular;

b) Final Accounts: Periodically (quarterly, annually), the Fund shall prepare reports on final accounts of income and expenditure and submit them to the Ministry of Agriculture and Rural Development; the Ministry of Agriculture and Rural Development shall be responsible for reviewing and approving the final accounts of the year in accordance with regulations.

2. Provincial Funds, Commune Funds

Based on the provisions of this Circular and current regulations, the Department of Agriculture and Rural Development shall take the lead in coordinating with the Department of Finance to submit to the People's Committee of the province to establish procedures and formalities for preparing plans and approving budgets for income and expenditure and final accounts of provincial funds and commune funds (including operating cost budgets for the Fund's organizational structure) in accordance with current regulations.

Article 8. Accounting System; Asset Management

1. The Central Fund, Provincial Funds, and Commune Funds shall apply the Accounting System for Administrative and Public Institutions (issued pursuant to Decision No. 19/2006/QD-BTC dated March 30, 2006 of the Minister of Finance) to implement accounting work for the Fund.

2. The Central Fund, Provincial Funds, and Commune Funds shall manage and utilize assets in accordance with the Law on State Asset Management and Utilization and related guiding documents.

Article 9. Inspection, Audit, and Financial Transparency System

1. The Fund must implement financial transparency in accordance with the law.

2. The Ministry of Agriculture and Rural Development shall be responsible for regularly or spot-checking the activities of the Central Fund; the Department of Agriculture and Rural Development shall be responsible for regularly or spot-checking the activities of the Provincial Fund; the results of inspections shall be sent to the finance department at the same level for coordination in monitoring and management.

3. Based on management requirements, the Ministry of Finance shall inspect the financial reports of the Central Fund; the Department of Finance shall inspect the financial reports of the Provincial Fund and Commune Fund.

Article 10. Effective Date

1. This Circular takes effect from July 10, 2012.

2. During the implementation process, if there are any difficulties, units shall reflect them to the Ministry of Finance for consideration and resolution./.