What are regulations on Account 971 - Bad debts already written off of microfinance institutions in Vietnam?
Hello Lawnet. I have a question as follows. Regarding accounting regimes of microfinance institutions, what are regulations on Account 971 - Bad debts already written off of microfinance institutions in Vietnam? Thank you!
Pursuant to Article 66 of the Circular 05/2019/TT-BTC (takes effect from 01/04/2019) stipulating regulations on Account 971 - Bad debts already written off of microfinance institutions in Vietnam as follows:
1. Accounting principles
a. This account shall be used for recording the followings:
- Charged-off debts under surveillance: Charged-off debts (including principal and interest) already offset by provisions against risk and put under control to continue to be recovered gradually. The period of surveillance in this account must be subject to regulations adopted by the Ministry of Finance. Upon expiration of such period, if debts are not recovered, they must be remitted under applicable regulations;
- Charged-off debts arising from payment activities: This account shall be used for keeping track of debts charged off during payment activities of microfinance institutions which have been offset by provisions against risks, are under surveillance for recovery of all of such debts. The surveillance period in this account must be subject existing regulations of the Ministry of Finance. Upon expiration of such period, if debt amounts are still outstanding, all of these debts shall be remitted.
b. Microfinance institutions must use subaccounts recording details of specific borrowers and debts. As for debts to be remitted under the Government's orders, they shall not be recorded in this account.
2. Components and contents of this account
Debit side:
Bad debts already offset but kept under surveillance outside of financial status reports.
Credit side:
- Amounts recoverable from borrowing customers;
- Debt amounts charged off after the surveillance period expires.
Balances on the Debit side: Reflecting the amount of charged-off debts already offset but continuing to be put under surveillance for recovery at the reporting time.
Above are regulations on Account 971 - Bad debts already written off of microfinance institutions in Vietnam.
Best regards!
