New regulations on accounts of cooperatives in Vietnam under Circular 71

New regulations on accounts of cooperatives in Vietnam under Circular 71 (Image from Internet)

On October 7, 2024, the Minister of Finance of Vietnam issued Circular 71/2024/TT-BTC guiding the accounting for cooperatives and cooperative unions; including new regulations on accounting accounts and accounting documents for cooperatives.

New regulations on accounts of cooperatives in Vietnam under Circular 71

To be specific: Article 3 of Circular 71/2024/TT-BTC regulates the accounting accounts for cooperatives as follows:

- Accounting accounts are used to classify and systematize economic, financial transactions according to economic content.

- Cooperatives apply the accounting account system guided in Appendix I issued with this Circular to serve bookkeeping.

The accounting accounts applicable to cooperatives include accounts in the main ledger (including accounts from type 1 to type 6 and type 9 accounts) and off-ledger accounts (type 0 accounts).

For accounts in the main ledger, double-entry bookkeeping is applied (economic transactions must be recorded in the Debit side of at least one account and in the Credit side of at least one other account).

For off-ledger accounts, a single-entry bookkeeping is applied (economic transactions are recorded only in the Debit or Credit side of one account, without reciprocal entry with another account).

- Cooperatives are allowed to add detailed accounts to the accounts prescribed in the accounting account system list (Appendix I) issued with Circular 71/2024/TT-BTC to account in detail according to management requirements of the cooperative.

- In case it is necessary to add an account at the same level as accounts prescribed in the accounting account system list (Appendix I) issued with Circular 71/2024/TT-BTC, the cooperative must comply with the provisions of the Accounting Law to ensure uniformity in the use of accounts and the presentation of information on financial statements, avoiding omissions or duplication of financial statement information.

- The accounting account system list, explanations of the content, structure, and accounting methods of accounts are stated in Appendix I "Accounting Account System List and Accounting Methods" issued with Circular 71/2024/TT-BTC.

Note:

(1) Cooperatives shall not continue to use Account 332 - Payables of internal credit operations, except those cooperatives with internal credit contracts signed before September 1, 2023, and still valid, can continue to use Account 332 - Payables of internal credit operations to reflect the amount deposited by members into the cooperative to earn interest according to the form of internal credit regulated by the Law on Cooperatives 2012 until these internal credit contracts expire.

(2) Cooperatives with internal credit contracts signed before September 1, 2023, and still valid, shall use Account 6123 - Operating Costs for Internal Loans (detailed) to track interest expense payables (funds mobilized from members) to members until these internal credit contracts signed before September 1, 2023, expire.

(3) Cooperatives shall not continue to use Account 359 - Credit Risk Reserve Fund to reflect the provisioning for credit risk. Cooperatives with remaining balances in the Credit Risk Reserve Fund should transfer the balances tracked on Account 359 - Credit Risk Reserve Fund to detail tracking on Account 338 - Other Payables and present in the Explanatory Notes to Financial Statements.

(4) Cooperatives shall convert balances of the following Accounts:

- Cooperatives shall base on the balance of Account 132 - Receivables of internal credit operations to transfer to Account 132 - Receivables of internal loan operations.

- Cooperatives recognizing and tracking state support in non-refundable non-monetary assets, land use rights allocated or leased by the state, and other assets as fixed assets (detailed undivided assets) shall transfer the detailed balance of Account 211 - Fixed Assets (detailed undivided assets) to track on Account 212 - Common Undivided Assets (detailed by each type of asset, each recorded asset object).

Simultaneously, transfer the source forming assets from state support in non-refundable non-monetary assets, land use rights allocated or leased by the state, and other fixed assets being tracked on Account 442 - State Non-refundable Subsidy, Aid Source to Account 4422 - Common Undivided Asset Formation Source.

(5) Cooperatives applying Circular 133/2016/TT-BTC shall convert accounting balances according to the provisions of clause 5, Article 7 of Circular 71/2024/TT-BTC.

More details can be found in Circular 71/2024/TT-BTC, which takes effect in Vietnam from October 7, 2024, and applies for fiscal years beginning on or after January 1, 2025. It also replaces Circular 24/2017/TT-BTC guiding accounting for cooperatives and cooperative unions.

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