Circular 133: Emphasizing Practical Applicability in Enterprises

The new accounting regime applicable to SMEs is highly open and flexible, offering businesses many choices. To be specific:

- Primarily regulates Level 1 accounts, with only a few detailed to Level 2, each account only reflecting one content and not differentiated into short-term and long-term accounts. Enterprises may independently detail and monitor short-term and long-term or open detailed accounts based on their management needs;- Eliminates all mandatory requirements for documents and accounting books. SMEs are free to develop their own system of documents and accounting books (must meet the requirements of the Accounting Law) to meet the management and operation needs appropriate to their specific activities;- Specifies only accounting principles and does not detail accounting entries. Based on the accounting principles, SMEs will have the autonomy to decide appropriate accounting entries corresponding to their document flow processes and habits, as long as the financial reports are compliant. SMEs may consult professional guidebooks if they cannot independently apply the accounting principles to book entries (preparing accounting entries);- If meeting the criteria prescribed by the regime, SMEs are allowed to independently choose the currency for bookkeeping;- Have the discretion to record or not to record revenue from internal transactions, regardless of whether the document issued is a VAT invoice or an internal stock release slip;- Independently decide whether to record the capital received from the enterprise in dependent accounting units as a liability or owner's equity;- Are allowed to choose financial report formats based on decreasing liquidity or distinguishing between short-term and long-term in the traditional manner.

In addition to regulations aimed at increasing applicability within enterprises, the Circular also includes separate guidelines for micro-enterprises in the simplest direction, with guidance for enterprises that do not meet the continuous operation assumption, such as those in the process of dissolution, bankruptcy, etc.

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