Whose approval is required for small and medium enterprises to change the balance sheet in Vietnam?
Whose approval is required for small and medium enterprises to change the balance sheet in Vietnam?
Pursuant to Clause 1, Article 10 of Circular No. 133/2016/TT-BTC stipulating as follows:
Registration of changes to accounting policy
1. Regarding the balance sheet:
a) In the cases where an enterprise wishes to add a sub-account or change the name, symbol, contents, transaction accounting method of a sub-account, it must obtain a written approval by the Ministry of Finance.
b) An enterprise may add sub-accounts account to accounts without sub-accounts specified in the Enterprise Account System in Appendix 1 enclosed herewith without approval by the Ministry of Finance.
Thus, if a small and medium enterprise wishes to change the accounting policy for the balance sheet, it shall be divided into two cases as follows:
Case 1: In the cases where an enterprise wishes to add a sub-account or change the name, symbol, contents, transaction accounting method of a sub-account, it must obtain a written approval by the Ministry of Finance.
Case 2: An enterprise may add sub-accounts account to accounts without sub-accounts specified in the Enterprise Account System in Appendix 1 enclosed with Circular No. 133/2016/TT-BTC without approval by the Ministry of Finance.
Thus, not all cases of small and medium enterprises that wish to change the accounting policy for the balance sheet need the prior written approval of the Ministry of Finance, but also depend on the type of accounts as set forth above.
Whose approval is required for small and medium enterprises to change the balance sheet in Vietnam?
What are the rules for cash accounting applicable to small and medium enterprises in Vietnam?
Pursuant to Article 11 of Circular No. 133/2016/TT-BTC stipulating as follows:
Rules for cash accounting
1. The accountant must keep daily records of revenues, expenses, receipt and dispatching of money cash funds or foreign currencies in the Journals and calculate the fund balance and every account in the bank at all times for verification.
2. Deposits paid by other organizations and individuals in the enterprise shall be managed and recorded similarly to the enterprise’s money.
3. The receipt or payment slips with sufficient signatures are required when obtaining receipts or making payments of cash. The debit notes or credit notes or banking statements are required when recording bank deposits.
4. The accountant must keep records of cash in foreign currency in details. When transactions in foreign currencies are made, foreign currencies shall be converted into VND according to the following rules:
- Actual exchange rates shall be applied to the debit side of cash accounts;
- Weighted average exchange rates or actual exchange rates shall be applied to the credit side of cash accounts.
The determination of weighted average exchange rate and actual exchange rate is specified in Article 52 of this Circular.
5. In the cases where the enterprise applies the actual exchange rate to record the money and exchange differences that occur in the period in the credit side of cash accounts, it may record them at the time of payment or on a periodical basis depending on the characteristics of its operation. If at the end of accounting period:
- The cash account balance in foreign currency is empty, the enterprise must aggregate all exchange differences that occur in the period with financial income or financial expense in the period.
- If the cash account balance in foreign currency is positive, the enterprise shall carry out reassessment as specified in Article 52 of this Circular.
6. The foreign currency balance must be reassessed at the time of preparation of the financial statement at the closing average transfer rate of the commercial bank where the enterprise’s transactions are usually made (hereinafter referred to as “the regular bank”).
Determination of the average transfer rate and method for handling exchange difference due to reassessment of foreign currency accounts are specified in Article 52 of this Circular.
Thus, for small and medium enterprises that choose to apply the accounting policy according to Circular 133, they must ensure 06 rules of cash accounting as prescribed above.
What are the rules for accounting of receivables applicable to small and medium enterprises in Vietnam?
Pursuant to Article 16 of Circular No. 133/2016/TT-BTC stipulating as follows:
Rules for accounting of receivables
1. The receivables shall be sorted by terms, debtors, currency and other factors according to requirements for management.
2. The receivable shall be classified as trade receivables, intra-company receivables and other receivables as follows:
a) Trade receivables include commercial receivables generating from purchase-sale related transactions, such as: receivables from sales, services, liquidation or transfer of assets (fixed assets, investment property, financial investments) between enterprises and buyers (independent units against buyers, including units in which the enterprise invest). These receivables include receivables for sale of exports via the trustee.
b) Intra-company receivables include receivables between superior units and affiliated units.
c) Other receivables include non-commercial or non-trading receivables, such as:
- Receivables generating financial income, such as: receivables from loan interest, deposit interest, dividends and divided profits;
- Reimbursable payments on behalf of a third party; receivables on behalf of the trustor which are collected by the trustee;
- Non-commercial receivables include non-monetary borrowed assets, fines, compensation, unresolved asset losses, etc.
3. When preparing a financial statement, the receivables shall be classified as short-term receivables or long-term receivables according to their remaining terms. Receivables on the financial position statement may include amounts recorded to accounts other than accounts receivable, such as: loans recorded to account 1288; deposits recorded to account 1386, advances recorded to account 141, etc. The allowance for bad debts shall be determined according to the items classified as short-term receivables and long-term receivables on the financial position statement.
4. Receivables in foreign currencies shall be sorted by currency and debtors as follows:
- When receivables are recorded (debit side of accounts receivable), they shall be converted into the accounting currency at the actual exchange rate applied at that time.
In case of advance received from the buyer where the criteria for recognition of revenues and incomes are met, the advance shall be recorded in Dr 131 at the specific exchange rate applied at the time of advance payment.
- When collecting receivables (recorded to debit side of accounts receivable), the enterprise may select between the recorded weighted average exchange rates applied to each debtor or the actual exchange rates at the time of collection.
Advance payments by buyers recorded to Dr 131 shall apply the actual exchange rate at the time of advance payment.
5. In the cases where the enterprise applies the actual exchange rate to record the receivables and exchange differences that occur in the period in the credit side of accounts receivable, it may record them at the time of payment or on a periodical basis depending on the characteristics of its operation. If at the end of accounting period:
- If the balance of accounts receivable is empty, the enterprise must aggregate all exchange differences that occur in the period with financial income or financial expense in the period.
- If the balance of accounts receivable is positive, the enterprise shall carry out reassessment as specified in Article 52 of this Circular.
6. The receivables that are foreign currency monetary items must be reassessed at the time of preparation of the financial statement at the closing average transfer rate of the enterprise’s regular bank.
The determination of the average transfer rate and method for handling exchange difference due to reassessment of receivables that are foreign currency monetary items are specified in Article 52 of this Circular.
7. Allowance for bad debts shall be made for those that are foreign currency monetary items.
Thus, for small and medium enterprises that choose to apply the accounting regime according to Circular 133, they must ensure that the rules for accounting of receivables are complied with the above regulations.
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