Guidelines for conversion of financial statements into Vietnam Dong

According to Circular No. 22/2017/TT-NHNN of the State Bank of Vietnam, depending on whether the credit institution is authorized to trade in foreign currencies or not, the conversion of financial reports will be carried out differently. Specifically, for credit institutions not authorized to trade in foreign currencies, the conversion shall be conducted according to the following principles:

- Assets and liabilities shall be converted into VND at the spot transfer rate at the end of the last working day in the reporting period of the commercial bank where the credit institution regularly trade during the accounting period;

- Charter capital in foreign currency shall be converted into VND at the spot transfer rate of the commercial bank where the credit institution regularly trade during the accounting period at the date of receiving the contributed capital;

- Undistributed after-tax profits and funds derived therefrom shall be converted into VND according to items of the income statement;

- Paid profits and dividends shall be converted into VND at the spot transfer rate of the commercial bank where the credit institution regularly trade during the accounting period at the payment date;

- Items in the income statement and cash flow statement shall be converted into VND at the spot transfer rate of the commercial bank where the credit institution regularly trade during the accounting period at the occurrence date.

- Foreign exchange differences arising when converting financial statements prepared in foreign currencies into VND shall be recognized as “Exchange difference” in the equity item of the balance sheet and shall not be recognized in the income statement.

View relevant provisions at Circular No. 22/2017/TT-NHNN of the State Bank of Vietnam, effective from April 01, 2018.

- Thanh Lam -

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