Joint Circular No. 97/1997/TTLT/BTC-BGTVT of the Ministry of Finance and the Ministry of Transport guiding the financial management regime for state-owned enterprises operating public services in the Inspection industry.

 

JOINT CIRCULAR

Guidelines on financial management for state-owned enterprises operating public services in the Inspection Industry

Pursuant to Decree No. 56/CP dated October 2, 1996 of the Government on state-owned enterprises operating public services, Circular No. 06 TC/TCDN dated February 24, 1997 of the Ministry of Finance guiding the financial management regime for state-owned enterprises operating public services, based on the characteristics of the activities of the Vietnamese Inspection Industry, the Ministry of Finance and the Ministry of Transport guide the financial management regime for state-owned enterprises operating public services in the Vietnamese Inspection Industry 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.

1. The subject of this Circular is: The Vietnam Inspection Agency and inspection units subordinate to provincial Departments of Transport, local Departments of Transport and Communications that have been decided by competent authorities to be state-owned enterprises operating public services (referred to collectively as public service inspection enterprises).

2. Public service inspection enterprises are responsible for using capital and resources allocated by the State to perform inspection work according to current fee and price lists prescribed by the State.

3. In addition to assigned public service tasks, public service inspection enterprises have the right to utilize land, capital, and State assets after completing their public service tasks and raising capital to organize scientific and technical services, consulting services suitable to the enterprise's capacity and market demand under the following conditions:

- They obtain written approval from the authority deciding the establishment of the enterprise.

- It does not affect the performance of inspection work assigned by the State.

- Registering additional business operations according to current regulations.

- They separately account for the additional business operations.

- They fulfill tax obligations for the additional business operations according to the law.

II. MANAGEMENT AND USE OF CAPITAL AND ASSETS.

1. Capital Investment.

Public service inspection enterprises shall be provided with sufficient initial charter capital, not less than the statutory capital prescribed by the State, to construct, purchase, and manage fixed and circulating assets appropriate to the scale and assigned tasks.

Public service inspection enterprises currently in operation, if truly lacking capital compared to the public service tasks assigned by the State (after mobilizing existing capital within the unit), shall be supplemented by the State as follows:

- For public service inspection enterprises making profits, tax benefits may be considered to supplement the unit's capital according to legal provisions.

- For public service inspection enterprises not making profits or still lacking capital after considering a tax reduction, they may be considered for additional capital investment by the State.

Procedures for basic construction investment and circulating capital for public service inspection enterprises shall be carried out according to State regulations.

2. Capital Mobilization.

2.1. When there is a need to raise capital, seek joint venture funding, or mortgage the value of land attached to assets under the unit's management at Vietnamese banks to borrow funds for public service activities as prescribed by law, public service inspection enterprises must prepare specific plans to submit to the State Capital and Asset Management Authority at the enterprise for comments before submitting to the head of the authority deciding the establishment of the unit for approval.

2.2. In cases where public service inspection enterprises organize business activities outside of assigned public service tasks, they can borrow from credit organizations (commercial banks, finance companies, etc.), other enterprises, and individuals (including employees within the enterprise) to serve business activities, but must comply with legal provisions and not alter ownership forms.

2.3. Interest rates on raised capital recorded in production and service costs of the enterprise must not exceed the maximum lending rate announced by the State Bank of Vietnam during the period of capital raising in the same industry.

2.4. When raising capital, enterprises must carefully consider economic efficiency, ensuring proper and effective use of raised capital, not using short-term loans for construction investment. Enterprises must repay principal and interest according to commitments when raising capital.

The head of public service inspection enterprises shall be responsible to the State for preparing capital mobilization plans, using capital improperly or ineffectively leading to capital losses.

3. Investment outside the enterprise

3.1. When there is a need to use capital, assets, land value, or rental fees for external investment, public service inspection enterprises must prepare contribution plans or explain joint venture projects to submit to the State Capital and Asset Management Authority at the enterprise for comments before submitting to the head of the authority deciding the establishment of the enterprise for approval.

3.2. External investment by public service inspection enterprises must not affect assigned public service tasks, must comply with legal provisions, ensure effectiveness, capital preservation and development, and increased income. When using land value for external investment, it must follow the provisions of the Land Law.

3.3 Public service inspection enterprises shall not use State-invested capital for monetary transactions such as purchasing bonds, bills, savings deposits...

3.4. Public service inspection enterprises are not permitted to invest in non-state-owned enterprises where managers, operators, or major owners are spouses, parents, or children of the enterprise's General Director.

4. Public service inspection enterprises are responsible for maintaining accurate accounting records of all current assets and capital according to current accounting and statistical systems; truthfully and promptly reflecting the situation of asset and capital usage and changes during operations.

5. Transfer, liquidation, leasing, pledging, and mortgaging of assets.

5.1. The public utility inspection enterprise may sell off or liquidate unused or obsolete technical assets to recover funds for more effective business purposes.

When selling or liquidating assets, enterprises must establish an evaluation committee to assess technical aspects, appraise asset values, and organize auctions according to legal provisions. Differences between proceeds from asset sales or liquidation and remaining book values, along with sale or liquidation expenses, are recorded in business results.

5.2. Major machinery, equipment, and assets critical to the operation of public service inspection enterprises, when sold or liquidated, must be approved in writing by the enterprise establishment authority and the State Capital and Asset Management Authority at the enterprise.

5.3. For assets leased to enhance utilization efficiency and increase revenue, public service inspection enterprises must still depreciate according to prescribed regulations, monitor, and recover assets upon lease expiration.

5.4. Assets pledged or mortgaged for loans at credit institutions must be carried out according to the procedures and formalities prescribed by law.

Public service inspection enterprises are not allowed to pledge, mortgage, or lease borrowed, rented, held, or mortgaged assets from other enterprises without the consent of the owners of those assets.

6. Handling asset losses.

Asset loss handling shall follow the following principles:

- If due to subjective reasons, the person responsible must bear the responsibility for compensation.

- If due to objective reasons, for insured assets, insurance organizations will compensate.

- The remaining loss (after deducting the compensation amount from the person causing the loss and the insurance company's compensation) of the public utility enterprise Inspection shall be covered by the financial reserve fund (if available); if insufficient, it shall be recorded as business expenses.

- In cases of property losses due to force majeure reasons (natural disasters, fires...), the head of the public utility enterprise Inspection shall develop a plan and report to the finance authority. The finance authority shall discuss with the authority that established the enterprise to decide on handling or report to the Prime Minister for decision.

After processing the loss, the public utility enterprise Inspection must adjust its accounting books according to the handling decision.

7. Capital transfer, responsibility for capital preservation, asset revaluation, and management of receivables and payables shall be conducted in accordance with the provisions applicable to state-owned enterprises engaged in business activities.

III. FINANCIAL RESULTS AND HANDLING OF THE PUBLIC UTILITY INSPECTION ENTERPRISE'S RESULTS

A. FINANCIAL RESULTS

1. Revenue of the public utility enterprise Inspection includes revenue from inspection activities, revenue from business operations, and other activities.

1.1. Revenue from inspection activities includes income from fees, price ranges, and charges prescribed by the State for the following activities:

- Vessel inspection according to the contents stipulated in Decision No. 203/TTg dated December 28, 1992 of the Government Prime Minister on vessel inspection in Vietnam.

- Inspection of road transport vehicles, railway equipment, inland waterway vessels, and lifting equipment.

- Inspection of offshore drilling platforms and floating units.

- Container inspections used in the transportation industry.

- Inspection of various types of containers used in the transportation industry.

- Review of technical design projects for manufacturing, assembling, and modifying transportation equipment and offshore drilling platforms.

- Issuing certificates of inspection personnel, product quality, and technical safety of transportation equipment within the scope of responsibility under Vietnamese law and international treaties to which Vietnam is a party.

- Inspecting and issuing certificates for technical safety management systems of enterprises whose products fall within the technical inspection scope of the Vietnam Inspection Agency, in accordance with Vietnamese law and related international treaties (ISM) to which Vietnam is a party.

- Income from joint ventures and cooperation with foreign inspection organizations. The income from joint ventures and cooperation depends on agreements between the Vietnam Inspection Agency and foreign inspection organizations or through international bidding.

- Income from cooperation and joint ventures with foreign inspection organizations.

1.2. Revenue from business operations and other activities such as scientific and technical services, consulting services, and other production and business activities shall be regulated as for state-owned enterprises engaged in business operations.

1.3. The public utility enterprise Inspection has the responsibility to maintain complete records of all sources of income generated according to the State regulations. In cases where special receipts and invoices are used, they must be registered with the Ministry of Finance (General Tax Department).

2. The costs of the public utility enterprise Inspection include inspection activity costs, business operation costs, and other activities.

2.1. The contents of expenses for inspection activities include:

- Material costs, fuel, energy consumption during the inspection process; actual replacement parts used.

- Depreciation costs of fixed assets: All fixed assets of the public utility enterprise Inspection must be utilized in production and business activities and depreciated sufficiently according to State regulations to recover capital. After fully recovering the capital, if the fixed assets are still in use, the enterprise does not need to continue depreciation but must manage and use them according to current regulations.

- Labor costs, wages, and wage-like allowances as prescribed must be paid to workers and staff performing inspection, fee collection, and management tasks.

- Contributions to social insurance, health insurance, trade union funds of the enterprise according to current state regulations.

- External service costs such as electricity, water, telephone, fax, outsourced repair and maintenance of fixed assets (SCTX&SCL), auditing, payment for technical documentation, patents, technology licenses, asset insurance, files, forms, circulation permits, and other external services.

- Purchase costs for individual machinery, equipment, working tools (not yet meeting the criteria for fixed assets) directly serving inspection work.

- Inspection service costs such as travel expenses, mission expenses, rental of fixed assets, land rental, working location rental, protective clothing expenses, scientific research, compilation and printing of procedures, regulations, standards, technical documents, innovations, training, and retraining to improve inspector skills and management knowledge, expenses for receiving and sending delegations according to regulations, bank loan interest payments, administrative management expenses...

- Costs for foreign inspection organizations, domestic affiliated units, and cooperative units.

- Accident investigation costs.

- Other monetary costs such as reception, ceremonial, conference, transaction, diplomatic... expenses, the maximum level not exceeding the state's regulations.

Expenses for raw materials, purchased services, reception, ceremonial, conference... must have valid invoices and receipts according to the Ministry of Finance's regulations.

2.2. The contents of business operation costs and other activity costs are implemented according to the regulations applicable to state-owned enterprises engaged in business operations.

3. The public utility enterprise Inspection may use revenue to offset expenses, including:

- Inspection activity revenue is used to cover public utility operation costs, taxes, and other revenues of the State as prescribed by law (excluding corporate income tax).

- Business operation revenue and other activity revenues are used to cover business operation costs, other activity costs, taxes, and other revenues of the State as prescribed by law (excluding corporate income tax).

The public utility enterprise Inspection must ensure profitability in organizing business operations and cannot use profits from public utility activities to cover losses from business operations.

B. FINANCIAL RESULT HANDLING

1. For public utility enterprises Inspection that achieve profits in a year (including business and other activity profits), distribution shall be carried out in the following order:

a. Pay corporate income tax as required by law.

b. Deduct fines for disciplinary violations, administrative violations, breach of contract penalties, overdue payment penalties, and legitimate expenses not deducted when determining taxable profit.

c. Deduct losses not deducted from pre-tax profits.

d. Distribute profits to capital contributors according to the business cooperation contract (if applicable).

e. The remaining profit after deducting items a, b, c, and d, the Inspection shall allocate funds as follows:

- Development investment fund: minimum allocation rate of 50%.

- Financial reserve fund: allocate 10%, the balance of this fund shall not exceed 25% of the statutory capital.

- Allocate up to three months' actual salary to the reward and welfare fund if the annual budget submission exceeds the previous year, two months' actual salary if the annual budget submission is equal to or lower than the previous year. The allocation ratio to each fund is decided by the head of the public utility enterprise Inspection after consulting with the trade union.

After deducting items a, b, c, and d, if the development investment fund and the financial reserve fund have surplus after allocating the reward and welfare fund according to the prescribed rate, the remaining profit shall be transferred entirely to the development investment fund; if the reward and welfare fund cannot be allocated at the rate of two months' actual salary, the public utility enterprise Inspection shall be provided with the shortfall by the State.

2. For the public utility enterprise Inspection, if inspection revenue is insufficient to cover reasonable expenses, after using 50% of the profit from business operations and other activities to cover the deficit, if there is still a loss, the State will support as follows:

- Subsidize the remaining loss.

- Provide two reward and welfare funds equal to 2 months' actual salary of the public utility enterprise Inspection.

The remaining profit from business operations and other activities shall be allocated to the development investment fund at 80% and the financial reserve fund at 20%.

3. Procedures, timing for establishing and purposes of using funds of public utility enterprises Inspection shall be carried out as for state-owned enterprises engaged in business operations.

IV. FINANCIAL PLAN

1. Annually, based on assigned tasks and financial agency guidelines, the Public Service Inspection Enterprise shall prepare production plans, financial income and expenditure plans, budgetary subsidy and price support plans, and report these to the enterprise establishment authority and the same-level financial agency. The enterprise establishment authority shall approve, consolidate, and report to the competent authority and relevant financial agencies.

2. Within the approved annual financial plan, budgetary subsidy and price support plan, the head of the enterprise establishment authority shall allocate the budget and assign plans to the Public Service Inspection Enterprise, and send them to the same-level financial agency for coordination.

The Public Service Inspection Enterprise, with its subordinate units responsible for allocating assigned plans to their respective subordinate units, shall also send reports to the local financial agencies where the subordinate units are located for coordinated monitoring and management of revenues, expenditures, and budget payments according to state regulations.

V. ACCOUNTING AUDIT, FINANCIAL REPORTING AND FINANCIAL DISCLOSURE

1. Preparing financial reports.

Quarterly and annually, the Public Service Inspection Enterprise shall be responsible for preparing financial statements in accordance with current regulations and submitting them to the enterprise establishment authority, tax agency, state capital and asset management agency at the enterprise, statistical agency, and the head of the Public Service Inspection Enterprise shall be accountable to the state and law for the accuracy and truthfulness of the financial statements.

2. Accounting audit and financial reporting review.

- Quarterly and annually, public utility enterprises Inspection shall be responsible for self-auditing accounting and financial reports.

- The enterprise establishment authority shall take the lead and coordinate with the state capital and asset management agency at the enterprise to organize the review and approval of the annual financial statements of the enterprise.

- Financial authorities shall have the duty to inspect compliance with financial systems, accounting practices, revenue and budget payment discipline, and the accuracy and truthfulness of financial reports.

- Violations of accounting systems, financial income and expenditure systems, budget payment systems, and fund allocation and utilization systems of the Public Service Inspection Enterprise shall be subject to administrative and economic penalties as prescribed by law.

3. Public disclosure of annual financial reports.

- Based on the annual financial statements that have been approved by the competent authority, the Public Service Inspection Enterprise shall publicly disclose certain financial expenditures before the Workers' and Staff Congress of the enterprise.

- The contents of the financial indicators to be publicly disclosed are stipulated in the annex attached to this Circular.

VI. IMPLEMENTATION PROVISIONS

1. In addition to the specific provisions for the Public Service Inspection Enterprise in this Circular, the Public Service Inspection Enterprise shall comply with other legal provisions applicable to state-owned enterprises.

2. This Circular takes effect from January 1, 1998. All previous regulations concerning the financial management system for state-owned enterprises engaged in public services in the inspection sector that conflict with this Circular are hereby abolished.

3. During implementation, any difficulties should be promptly reported to the Ministry of Finance and the Ministry of Transport for study and appropriate amendments and supplements.

 

SOCIALIST REPUBLIC OF VIETNAM

Independence - Freedom - Happiness

 

Legal Representative of

PUBLIC DISCLOSURE OF CERTAIN FINANCIAL INDICATORS
Start date of lease (day/month/year)

The enterprise is responsible for the accuracy and truthfulness of this report.

HEAD OF THE UNIT

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