Circular No. 99/2018/TT-BTC guides the preparation of consolidated financial reports for state accounting units that are superior accounting units.

CIRCULAR

Guidelines for preparing consolidated financial statements of state budget accounting entities

The state budget accounting entity is the superior accounting entity

___________________

 

       Pursuant to the Accounting Law on November 20, 2015;

       Pursuant to Decree No. 174/2016/NĐ-CP dated December 30, 2016 of the Government detailing and guiding the implementation of certain provisions of the Accounting Law;

       Pursuant to Decree No. 25/2017/NĐ-CP dated March 14, 2017 of the Government on financial reporting of state budget;

       Pursuant to Decree No. 87/2017/NĐ-CP dated July 26, 2017 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance;

       At the proposal of the Director of the Department of Accounting Supervision and Auditing;

       The Minister of Finance issues this Circular guiding the preparation of consolidated financial statements of state budget accounting entities which are superior accounting entities.

 

PART I

GENERAL PROVISIONS

       Article 1. Scope of Regulation

       This Circular stipulates and guides the principles, methods of preparation and presentation of consolidated financial statements of a state budget accounting entity comprising several subordinate accounting units.

       Article 2. Applicability

       1. This Circular applies to state budget accounting entities including: state agencies; public service organizations; organizations and units using the state budget; project management boards with legal personality established by state agencies or public service organizations; agencies and organizations managing state financial funds outside the state budget; organizations funded by the state to organize activities according to specific political-social goals.

       2. This Circular does not apply to entities that have separate regulations on the preparation of consolidated financial statements (consolidated).

       The State Reserve Fund shall not be included in the report of the Ministry of Finance (primary budget unit). The Ministry of Finance will separately prepare reports on the status of the State Reserve Fund for the State Treasury (hereinafter referred to as KBNN) to use and consolidate the state financial report.

       Article 3. Explanation of Terms

       The terms used in this Circular are understood as follows:

       1. Supplementary financial information report is a report providing additional financial information beyond the financial report or consolidated financial report prepared according to regulations to serve the preparation of consolidated financial statements of superior accounting entities.

       2. Consolidated financial statement is a report aimed at providing information about the financial situation, operating results, cash flows from operations, and explanatory information of the financial report of the superior entity as if it were an independent accounting entity. The consolidated financial statement is prepared by the superior accounting entity, compiled from its own financial report (as a basic accounting entity) and those of subordinate entities directly under it.

              3. Separate financial statement is a financial statement prepared by the basic accounting entity according to the accounting system currently applied by the entity. The separate financial statement provides information about the financial situation, operating results, and cash flows from operations of the basic accounting entity, helping the entity to enhance its accountability for receiving and using resources in accordance with the law, while providing information for the superior accounting entity to prepare consolidated financial statements.

       Administrative and public service accounting system includes the following accounting systems: Administrative and public service accounting system and other accounting systems developed and guided based on the provisions of the administrative and public service accounting system.

       Superior accounting entity is an entity responsible for consolidating financial reports, including primary budget units and intermediate accounting entities assigned by primary budget units to prepare consolidated financial statements of subordinate entities.

       Subordinate accounting entity is a lower-level accounting entity directly responsible for preparing and submitting financial reports (or consolidated financial reports) to the superior accounting entity according to the regulations of the primary budget unit. Subordinate accounting entities may include intermediate accounting entities and basic accounting entities or only consist of basic accounting entities.

       Article 4. Reporting Periods

       1. The consolidated financial report of the higher-level accounting unit shall be prepared according to the annual accounting period. In cases where laws stipulate different reporting periods, in addition to the annual report, the unit must also prepare the consolidated financial report according to those specified periods.

       2. Supplementary financial information reports shall be prepared according to the accounting period of the consolidated financial report.

       Article 5. Responsibilities of Units

       1. Responsibilities of Level 1 Budgetary Units

- Receiving financial reports, consolidated financial reports, and supplementary financial information reports from subordinate accounting units, and being responsible for controlling these received reports from subordinate accounting units.

- Preparing consolidated financial reports and supplementary financial information reports in accordance with this Circular. Ensuring the accuracy and consistency of indicators and data on the prepared reports.

If a level 1 budgetary unit does not have subordinate accounting units and has prepared individual financial reports according to the administrative and public institution accounting system, it must prepare supplementary financial information reports in accordance with this Circular.

- Submitting reports to the State Treasury at the same level to serve the preparation of the National Financial Report (for units under the central and provincial levels) or the County Consolidated Financial Information Report (for units under the county level).

Simultaneously sending reports to the same-level financial authority to serve the verification and checking of settlement figures according to regulations.

- Central level 1 budgetary units may decide to organize one or more intermediate accounting unit levels to prepare consolidated financial reports. Local level 1 budgetary units (provincial and county levels) can only organize up to one intermediate accounting unit level to prepare consolidated financial reports.

- Assigning tasks to lower-level intermediate accounting units to prepare consolidated financial reports must be consistent with the organizational model, management requirements of the unit, and current regulations. Intermediate accounting units are also upper-level budgetary units when they are assigned state budget estimates by level 1 budgetary units and are responsible for allocating budgets to lower-level units.

Determining intermediate units to assign tasks to prepare consolidated financial reports is detailed in Appendix No. 04 "Determination of Intermediate Accounting Units to Prepare Consolidated Financial Reports."

       đ) Heads of level 1 budgetary units are responsible for the accuracy, content, and format of the report forms compiled in accordance with this Circular.

       2. Responsibilities of Intermediate Accounting Units

       a) Intermediate accounting units are higher-level accounting units assigned the task of preparing consolidated financial reports by level 1 budgetary units in accordance with this Circular.

       b) At the end of the annual accounting period, intermediate accounting units must receive, prepare, and send the following reports:

- Receiving financial reports, consolidated financial reports, and supplementary financial information reports from subordinate accounting units, and being responsible for controlling these received reports from subordinate accounting units.

- Preparing consolidated financial statements and supplementary financial information reports in accordance with this Circular. Ensuring the accuracy and consistency of figures on the prepared reports.

- Sending reports to the directly superior accounting unit in accordance with this Circular.

       c) Intermediate units defined in this Circular include:

- Intermediate accounting unit 1 is a higher-level accounting unit directly subordinate to the level 1 budgetary unit, which may include intermediate accounting unit 2 and directly subordinate basic accounting units.

- Intermediate accounting unit 2 is a higher-level accounting unit directly subordinate to intermediate accounting unit 1, which includes directly subordinate basic accounting units.

If a level 1 budgetary unit organizes more than two intermediate accounting unit levels, these units apply the principles and methods of consolidation set out in this Circular.

       d) Heads of intermediate accounting units are responsible for the accuracy, content, and format of the report forms compiled.

       3. Responsibilities of Basic Accounting Units

       a) Basic accounting units are lower-level accounting units directly subordinate to level 1 budgetary units or intermediate accounting units, having independent accounting systems and must prepare individual financial reports according to the accounting system currently in use.

       b) At the end of the annual accounting period, basic accounting units must prepare and send the following reports:

- Basic accounting units applying the administrative and public institution accounting system: Preparing individual financial reports according to the administrative and public institution accounting system and preparing supplementary financial information reports in accordance with this Circular.

- Basic accounting units applying other accounting systems (other than the administrative and public institution accounting system): Preparing individual financial reports according to the current accounting system and not needing to prepare supplementary financial information reports.

- After ensuring the accuracy and consistency of the prepared reports, they must be sent to the directly superior accounting unit in accordance with the regulations.

       c) Heads of basic accounting units are responsible for the accuracy, content, and format of the report forms prepared by their units.

       Article 6. Time and Place for Submitting Reports

       1. For Level 1 Budget Units

- Level 1 budget units submit consolidated financial statements and supplementary financial information reports to the corresponding KBNN. In particular, level 1 budget units without subordinate accounting units shall submit financial statements and supplementary financial information reports to the corresponding KBNN.

- The deadline for submitting reports shall be carried out according to the provisions of Decree No. 25/2017/ND-CP and related guiding documents.

       b) Submit financial statements to the financial authority for annual settlement

Level 1 budget units submit consolidated financial statements (or financial statements for level 1 budget units without subordinate accounting units) to the corresponding financial authority according to the deadlines for submitting annual settlement reports as currently prescribed.

Intermediate accounting units submit consolidated financial statements and supplementary financial information reports, while basic accounting units submit financial statements and supplementary financial information reports to their immediate superior accounting units based on the deadlines set by level 1 budget units to ensure sufficient time for consolidating and submitting reports to the financial authority and the corresponding KBNN as stipulated.

       Article 7. Forms of Report Submission

       1. Reports sent to superior accounting units, financial authorities, and KBNN must be prepared on paper or transmitted electronically in the form of electronic transactions, strictly following the formats and symbols specified in this Circular.

       2. In cases where reports are submitted on paper, accounting units must also send accompanying data files to their superior units for use in preparing consolidated financial statements. Superior accounting units provide guidance on the format of data files for units within the scope of consolidated financial statement data compilation.

Chapter II

PROVISIONS ON CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY FINANCIAL INFORMATION REPORTS

Section 1. CONSOLIDATED FINANCIAL STATEMENTS

       Article 8. Purpose of Preparing Consolidated Financial Statements

       1. Consolidated financial statements provide economic and financial information for users to review and assess the financial situation, operational results, and cash generation capacity of superior accounting units during the accounting period, serving as a basis for making management, investment operation decisions, and other decisions by leaders at various levels and relevant persons, while enhancing the accountability of superior accounting units regarding the receipt and use of state resources in accordance with the law.

       2. Consolidated financial statements of level 1 budget units also provide information for compiling national financial statements as stipulated in Clause 1, Article 16, Clause 1, Article 17, and Clause 1, Article 18 of Decree No. 25/2017/ND-CP on national financial statements.

       Article 9. Requirements for Preparing Consolidated Financial Statements

       Consolidated financial statements must be presented systematically and accurately, adhering to the formats and indicators specified in this Circular, with figures reflecting truthfully, objectively, fully, timely, and appropriately the financial situation, operational results, cash flows from activities, and explanatory information of superior accounting units.

       Article 10. Principles for Preparing Consolidated Financial Statements

       1. Consolidated financial statements shall be prepared after the end of the annual accounting period (on December 31 each year).

The financial reports of subordinate accounting units used as the basis for preparing consolidated financial statements must be prepared for the same reporting period as the consolidated financial statements; if the end date of the accounting period differs from December 31, subordinate accounting units must prepare and submit reports for consolidation purposes in accordance with the provisions of this Circular.

       2. Consolidated financial statements of superior accounting units must be compiled comprehensively, including financial information of all subordinate accounting units under their jurisdiction as stipulated; among which, the indicators of assets, liabilities, net assets, revenue, expenses, and cash flows of the superior accounting unit shall be presented on corresponding report forms as if they were the reports of an independent accounting entity.

       3. Consolidated financial statements of superior accounting units shall be aggregated based on corresponding indicators using the data from individual financial statements of basic accounting units implementing the public institution accounting system and consolidated financial statements of intermediate accounting units within the scope of consolidated financial statement preparation, then excluding internal transactions within the reporting entity according to the provisions of this Circular.

       4. Financial information of subordinate accounting units implementing different accounting systems (other than the public institution accounting system) must be included in the consolidated financial statements of superior units, including the net asset figures and surplus/deficit (or post-tax profit) of the unit for the year.

       Article 11. Internal Transactions Excluded

       1. Internal transactions are transactions between accounting units implementing the public institution accounting system, including transactions between superior accounting units and subordinate accounting units, and between subordinate accounting units within the same scope of consolidated financial statement preparation.

       2. Data on internal transactions must be excluded when compiling the financial statements of superior accounting units, including balances at the time of preparing financial statements for receivables, payables; financial investments and investment receipts between units within the reporting entity; simultaneously excluding revenues, expenses, and cash flows generated between internal units during the year.

       3. Superior accounting units must reconcile internal transaction data between units within the scope of consolidated financial statement preparation before preparing consolidated financial statements to ensure accuracy, then exclude internal transactions. For internal sales and purchases of goods and assets, both revenue and expense indicators for the entire transaction value shall be excluded.

       Article 12. List of Consolidated Financial Reports

      The format and method for preparing Consolidated Financial Statements are specified in Appendix No. 01 "Consolidated Financial Statements" attached to this Circular.

       Article 13. Provisions on the scope of preparing consolidated financial statements

       1. Scope of preparing consolidated financial statements

       a) In cases where the first-level budget unit does not assign tasks to intermediate accounting units to prepare consolidated financial statements, the consolidation scope of the first-level budget unit is the entire individual financial statements of all basic accounting units under the first-level budget unit.

       b) In cases where the first-level budget unit assigns tasks to intermediate accounting units to prepare consolidated financial statements:

       - For intermediate accounting units: The consolidation scope of the report is the financial statements of the basic accounting units directly under the intermediate accounting unit and the consolidated financial statements of subordinate intermediate accounting units (if any).

       - First-level budget unit: The consolidation scope of the report is the financial statements of the basic accounting units directly under the first-level budget unit and the consolidated financial statements of intermediate accounting units directly under the first-level budget unit.

       c) In cases where there is a split, merger, acquisition, conversion of form or type of ownership, dissolution, cessation of operations, or transfer of lower-level accounting units during the fiscal year, the higher-level accounting unit must consolidate the data of the financial reports of the year with changes based on the reports of existing subordinate units at the time of report preparation and explain these changes.

       2. Preparation and notification of the list of units within the consolidation scope of financial statements:

       a) At the beginning of the accounting year, first-level budget units must prepare and notify a complete list of all accounting units within the consolidation scope of financial statements according to this Circular to all units listed in the list. This list must reflect the hierarchical relationship between units and identify intermediate accounting units assigned the task of preparing consolidated financial statements.

       b) In cases where there is a split, merger, acquisition, conversion of form or type of ownership, dissolution, cessation of operations, or transfer of lower-level accounting units during the fiscal year, before the end of the year when preparing the report, the first-level budget unit must issue a written notice to internal units about the change information so that related units have a basis for analyzing internal transactions when supplementing financial information in the report.

Units that have ceased operations or transferred to other units during the year must still be included in this list in the following year and noted as having ceased operations to provide the basis for the unit preparing the consolidated financial statement to explain in the consolidated financial statement.

       Article 14. Receiving Reports and Checking Data

       1. At the end of the accounting year, the higher-level accounting unit must receive all financial statements, consolidated financial statements, and supplementary financial information reports from all subordinate accounting units within the consolidation scope of the report as notified in the first-level budget unit's list.

       2. After receiving all reports as prescribed, the higher-level accounting unit must conduct checks and comparisons to ensure that all reports are prepared according to the prescribed formats, and that all indicators are presented in accordance with the accounting regulations currently applied by the units; check and compare the indicators in the reports to ensure consistency and accuracy among related indicators in the reports, with clear and sufficient information for the higher-level accounting unit to consolidate data as prescribed.

       3. The higher-level accounting unit must conduct comparisons of internal transaction data on supplementary financial information reports as prescribed.

       Article 15. Compilation of Summary Data Tables and Calculation of Indicators

       1. During the process of preparing consolidated financial reports, the superior accounting unit must compile summary data tables according to the model prescribed in this Circular. The summary data table serves as the basis for the superior accounting unit to prepare consolidated financial reports and supplementary financial information reports.

       2. The summary data table is compiled based on the financial report data of the basic accounting units, consolidated financial reports of intermediate accounting units, and supplementary financial information reports of accounting units within the scope of consolidation reporting.

       3. After compiling the data, the superior accounting unit must eliminate internal transactions and calculate indicators to be presented in the consolidated financial report. The indicators that must exclude internal transactions from specific consolidated financial reports are as follows:

       a) For the consolidated financial position report

       - Exclude the balance at the date of preparation of the financial report for internal receivables, including indicators such as accounts receivable from customers, prepaid payments to suppliers, and other receivables.

       - Exclude the balance at the date of preparation of the financial report for internal payables, including indicators such as accounts payable to suppliers, advance receipts from customers, and other payables.

       - Exclude the balance at the date of preparation of the financial report for financial investments and investment receipts (short-term and long-term) between units within the reporting entity.

       b) For the consolidated income statement

       - Exclude internal sales transactions within the year.

       - Exclude revenue transfer transactions within the entity where both the transferring and receiving units reflect revenue on their income statements.

       c) For the consolidated cash flow statement

       Exclude cash flows within the internal scope of the consolidated financial report entity.

       4. The summary data table is preserved and stored by the superior accounting unit as with general ledger books.

       5. List of summary data tables:

      The format and method of compiling the Summary Data Table are stipulated in Appendix No. 02 "Summary Data Table" issued together with this Circular.

       Article 16. Preparation of Consolidated Financial Reports

       1. For the consolidated financial position report and consolidated income statement: Detailed indicators are prepared based on data from the Consolidated Financial Report Indicators Summary Table (model S02/BTH).

       2. For the consolidated cash flow statement, cash flow from operating activities is prepared using the indirect method based on data from the consolidated financial position report and consolidated income statement of the same period of the entity. Cash flow from investing and financing activities is prepared based on the Consolidated Financial Report Indicators Summary Table (model S02/BTH).

       3. Notes to the consolidated financial report

The detailed figures of the indicators in the notes to the consolidated financial report: Based on the Consolidated Financial Report Indicators Summary Table (model S02/BTH) and the Supplementary Information Financial Data Summary Table (model S01/BTH) (part II. Aggregation of supplementary information notes data) to present detailed figures according to the format and form prescribed in this Circular.

For other information, refer to the reports of subordinate units and the overall situation of the entity preparing the consolidated financial report to aggregate information on the notes to the consolidated financial report, ensuring comprehensive reflection of important events occurring during the year of subordinate units and the accounting entity preparing the consolidated financial report.

       Article 17. Provisions on Adjusting Figures in Consolidated Financial Reports

       1. In cases where the accounting entity at the upper level discovers errors that need to be corrected in the figures reported by subordinate accounting entities (before the annual consolidated financial report is submitted to the competent state agency), it shall require the subordinate accounting entities to adjust their figures, prepare and resubmit the financial reports for the reporting year.

       2. In cases where errors are discovered after the annual consolidated financial report has been submitted to the competent state agency, corrections must be made to the figures reported in the year in which the error was found, and a clear explanation of these corrections must be provided, except when the competent authority requires adjustments to the figures and permits the preparation of a new consolidated financial report.

       Article 18. Publicizing Consolidated Financial Reports

       1. Primary budget units shall publicize consolidated financial reports in accordance with the provisions of the law.

       2. Where the consolidated financial report of a primary budget unit has been audited, the audit report of the auditing organization must be included when publicizing the report.

Section 2.

SUPPLEMENTARY FINANCIAL INFORMATION REPORT

       Article 19. Purpose of Supplementary Financial Information Report

       1. The supplementary financial information report is prepared to analyze detailed figures of certain indicators on financial statements and consolidated financial reports to provide information about internal transactions for the purpose of excluding internal transactions when the upper-level accounting entity prepares consolidated financial reports, while also providing additional explanatory information for the preparation of state financial reports.

       Article 20. Requirements for Supplementary Financial Information Report

       1. The supplementary financial information report must be prepared from the basic accounting entity based on complete and accurate recorded figures, ensuring the correct examination of payment relationships with relevant entities.

       2. In cases where a primary budget unit does not assign the task of preparing consolidated financial reports to an intermediate accounting entity but directly performs the task of consolidating reports from basic accounting entities, the supplementary financial information report must separate transaction figures including: Internal transactions within the primary budget unit, internal transactions outside the primary budget unit but within the state sector (if the accounting entity is located in a locality, it must also separate transactions outside the primary budget unit but within the same province), and transactions outside the state sector.

       3. In cases where a primary budget unit assigns the task of preparing consolidated financial reports to an intermediate accounting entity, the transaction relationships on the supplementary financial information report, in addition to the detailed separation required under Clause 2 of this Article, must also separately identify internal transactions according to each level of intermediate accounting entity preparing consolidated financial reports as prescribed.

       Article 21. Principles and Period for Supplemental Financial Information Reports

       1. The supplemental financial information report shall be prepared after the end of the annual accounting period together with the financial statements, consolidated financial statements, in accordance with the forms and indicators prescribed in this Circular, including additional indicators to prepare the consolidated financial position report, consolidated income statement, consolidated cash flow statement, and notes to the consolidated financial statements.

       2. The supplemental financial information report of the basic accounting unit shall be prepared based on detailed accounting records at the unit.

       3. The supplemental financial information report of the higher-level accounting unit shall be compiled from the supplemental financial information reports of subordinate accounting units within the scope of consolidation as prescribed.

       Article 22. Forms of Supplemental Financial Information Report

       The form and method of preparing the Supplemental Financial Information Report are stipulated in Appendix No. 03 "Supplemental Financial Information Report" issued together with this Circular.

Chapter III

IMPLEMENTATION

       Article 23. Effectiveness of Implementation

       This Circular takes effect from January 1, 2019 and applies to the preparation of consolidated financial statements starting from the 2018 fiscal year.

       Article 24. Implementation Organization

       1. Ministries, sectors, People's Committees of provinces and centrally governed cities are responsible for directing and implementing this Circular to primary budgetary units and accounting units within the scope of preparing consolidated financial statements as prescribed in this Circular.

       2. The Director of the Accounting and Auditing Supervision Department; the Head of the Ministry's Office and the Heads of relevant units under the Ministry of Finance are responsible for disseminating, guiding, inspecting, and enforcing this Circular./.