Circular No. 107/2017/TT-BTC: Vietnam’s regulation on financial statement

1. Entities required to make financial statements

After the closure of fiscal year, public sector entities must close book and submit a financial statement to competent authority and relevant units as prescribed.

2. Purposes

The financial statement is intended to provide information about the financial situation, historical financial performance and cash flow of the entity with the purpose of considering issuing decisions on financial and budgetary activities. The financial statement will enhance the entity’s accountability in terms of receipt and use of resources as per the law.

The said financial statement serves as the basis for the preparation of the superior entity’s consolidated financial statement.

3. Rules and requirements for making financial statement

- Rules:

The financial statement shall be made according to figures after the accounting book’s closure. The financial statement must be made in compliance with rules, contents, and methods as prescribed and present in consistency in accounting periods, any difference in presentation between accounting periods must be enclosed with notes for reasons.

The financial statement must bear the signatures of the person prepared, chief accountant, and head of accounting unit. The signatories of a financial statement must take responsibility for its contents.

- Requirements:

The financial statement must reflect truthfully and impartially the contents and value of items; present in a close and systematic structure in respect of financial situation, performance and cash flows in operating activities.

The financial statement must be made in a timely manner and on schedule applied to type of entities, and stay clear, easily understandable, and accurate.

The statement must reflect continuous figures, data of this period must be preceded by data of the previous period.

4. Reporting period

The entity must make a financial statement at the end of the fiscal year as prescribed in the Law on Accounting.

5. Responsibilities of entities in making financial statements

- Public sector entities must make annual financial statements using forms issued herewith; if a public sector entity has particular operation, its statement may be presented according to accounting regulations promulgated or approved by the Ministry of Finance.

- Public sector entities shall make financial statements using the adequate forms; except for the following accounting units which may choose simple financial statements:

(1) A regulatory agency that meets the following conditions:

+ Committee division or equivalent affiliated to the People’s Committee of district which is only assigned budget expenditure estimate of recurrent expenditures;

+ It is not assigned budget expenditure estimate of capital expenditures, expenditures from foreign capital; not assigned revenue estimate, costs or charges;

+ It has no affiliated entity.

(2) A public sector entity that meets the following conditions:

+ The public sector entity that is classified as an entity of which recurrent expenditures are covered by state budget (according to functions and objectives assigned by the competent authority, has no or low revenue sources);

+ It is not assigned budget expenditure estimate of capital expenditures, expenditures from foreign capital; not assigned revenue estimate, costs or charges;

+ It has no affiliated entity.

- If a superior accounting unit has inferior units other than accounting units, it must make a combined financial statement, including its and its inferior unit’s financial statements, excluding figures arising out of internal transactions between superior and inferior units and between inferior units (these inferior units, in the internal transactions, are considered as dependent cost-accounting units and are only required to submit financial statements to the superior unit for consolidation (aggregation), without other agencies.

6. Contents of financial statement and deadline for submitting financial statement

- Contents:

Each public sector entity must submit annual financial statements to the superior entity or competent authorities as prescribed in this Circular.

- Deadline for submitting financial statement:

The public sector entity must submit an annual financial statement to the competent authority or superior entity within 90 days, from the closure of the fiscal year as per the law.

7. Publishing financial statement

The financial statement shall be published as prescribed in laws and regulations on accounting and relevant documents.

8. The list of reports, forms, description of making simple and detailed financial statements is prescribed in Appendix 04 issued with Circular No. 107/2017/TT-BTC of the Ministry of Finance of Vietnam.

- Nguyen Trinh -

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