Circular 01/2017/TT-BTC: Costs of VAMC

1. Content of VAMC's expenses follows the regulations in Clause 2, Article 23 of Decree 53/2013/ND-CP.

2. Principles of expense recognition

- For expenses incurred in purchasing bad debts at market value, they are recorded when income arises from handling the bad debt as follows:

- In case the debt is recovered in multiple installments:- If revenue obtained during the period from debt handling (debt collection from the debtor; debt sale; exploitation, sale of collateral assets) is greater than or equal to the purchase cost of the debt: fully transfer the debt purchase cost into expenses of the period;- If revenue obtained during the period from debt handling (debt collection from the borrower, the obligor, and the guarantor; debt sale; exploitation, sale of collateral assets) is less than the purchase cost of the debt:

Partially transfer the debt purchase cost into expenses of the period with an amount equivalent to the actual amount collected from handling the debt.

When the debt continues to be recovered, the remaining debt purchase cost will continue to be transferred into expenses according to the above principle.

When the final remaining portion of the debt is recovered, transfer the remaining debt purchase cost fully into expenses of the period.

- In case the debt is recovered in a single installment: fully transfer the debt purchase cost into expenses of the period at the time the debt is collected.

- For expenses related to repairing and upgrading assets:

- For bad debts purchased at market value: VAMC records prepaid expenses (detailed for each debt) corresponding to the costs for repairing and upgrading assets. When the asset is sold or the associated bad debt is recovered, or money is generated from exploiting the asset, the collected amount must be recorded as revenue. Concurrently, the settlement of prepaid expenses corresponding to VAMC's used expenses for repairing and upgrading the asset is conducted according to the regulations in Clause 1, Article 7 of Circular 01/2017/TT-BTC.- For bad debts purchased with special bonds: VAMC records prepaid expenses (detailed for each debt) corresponding to the costs for repairing and upgrading assets. When the asset is sold or the associated bad debt is recovered, or money is generated from exploiting the asset, VAMC gradually settles the receivables corresponding to VAMC's used expenses for repairing and upgrading the asset.

- For other expenses (including debt collection costs; consulting and brokerage fees for purchasing, selling, and handling debts and assets; costs for selling debts, shares, and transferring capital contributions; provision for risk; salaries, bonuses, and allowances for officers and employees; auction costs; company management costs; loan interest payments; and other expenses): VAMC only records expenses for actual incurred amounts based on reasonable and valid invoices and proofs of each expenditure.

3. VAMC is not allowed to include in expenses the following:

- Expenses not related to VAMC’s business activities.- Fines for administrative violations that individuals must pay according to legal regulations.- Expenses without valid documents.- Expenses recorded but not actually paid.- Expenses covered by other funding sources.- Other unreasonable, invalid expenses.

Refer to additional contents in: Circular 01/2017/TT-BTC effective February 21, 2017.

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