Thông tư 97/2000/TT-BTC

CIRCULAR

GUIDING THE APPLICATION OF THE FINANCIAL REGIME TO GRASSROOTS PEOPLES CREDIT FUNDS AND REGIONAL PEOPLES CREDIT FUNDS

In furtherance of the Government’s Decree No.166/1999/ND-CP of November 19, 1999 on the financial regimes applicable to credit institutions, basing itself on the scale and character of operation of the people’s credit funds, the Finance Ministry hereby guides the application of contents of the financial regime to credit funds as follows:

Chapter I

GENERAL PROVISIONS

1. Subject to this Circular are grassroots people’s credit funds and regional credit funds (hereafter referred collectively to as people’s credit funds), which are established, organized and operate according to the provisions of the Law on Credit Institutions, the Law on Cooperatives and the other relevant legal documents.

2. Financial operations of people’s credit funds shall comply with the Government’s Decree No.166/1999/ND-CP of November 19, 1999 on the financial regimes applicable to credit institutions, specific guidance in this Circular and other relevant legal documents on financial management.

3. The people’s credit funds shall effect the financial publicity to State management agencies, capital-contributing members, organizations and individuals having economic relations with them.

The people’s credit funds are financially independent, self-responsible for their own business operations, and perform their obligations and commitments according to the provisions of law.

4. Chairpersons of managing boards and directors of people’s credit funds shall be held responsible before law, State management agencies and members’ congresses for the application of the financial regime by their respective people’s credit funds.

Chapter II

SPECIFIC PROVISIONS

I. MANAGEMENT AND USE OF CAPITAL AND ASSETS

1. Capital management

1.1. Operation capital of a people’s credit fund includes:

a/ Charter capital, which is capital amount contributed by the members and inscribed in the charter of such people’s credit fund.

b/ Mobilized capital.

c/ Borrowed capital.

d/ Entrusted service capital of organizations and individuals at home and abroad.

e/ The charter capital-supplementing reserve fund, professional operation development investment fund, financial reserve fund, severance allowance reserve fund, reward fund and welfare fund.

f/ Profit left to such people’s credit fund but not yet distributed.

g/ Other kinds of capital.

1.2. In the course of operation, the people’s credit fund shall have to maintain the charter capital at a level not lower than the legal capital level prescribed by the Government for people’s credit funds.

1.3. Own capital of the people’s credit fund as stipulated by the State Bank Governor.

2. The use of capital of people’s credit funds: The people’s credit funds are entitled to use their capital to:

- Invest in procurement of fixed assets in service of their operations on the principle that the such fixed assets’ residual value must not exceed 50% of the own capital of the funds. People’s credit funds shall have to fully observe the State’s regulations on investment and construction management.

- Provide loans to their members according to the provisions of law.

- Contribute capital and/or purchase shares. People’s credit funds are entitled to use their charter capital and charter capital supplementing reserve fund to contribute capital to the Central People’s Credit Fund according to the provisions of law.

- Take part in regulating capital within the system.

- Use for other purposes as specified by law.

3. The people’s credit funds shall have to monitor the whole existing assets and capital, conduct the cost-accounting, open and make entries in accounting books strictly according to the provisions of the current legislation on accounting and statistics; reflect fully, accurately and promptly the use of and changes in assets and capital, as well as recoverable loans and debts in the course of business operation.

4. Periodically and at the end of each fiscal year, the people’s credit funds shall have to conduct the inventory of their existing assets and capital; accurately determine the surplus or deficient assets, the debt situation, overdue-debts, bad debts, ascertain the causes thereof and determine the handling responsibility. In cases where assets are lost or damaged, the causes of such loss or damage as well as liability of each section or individual therefor must be clearly determined.

5. Assurance of safety and development of capital: The people’s credit funds shall have to apply measures to ensure the safety of their capital according to the following regulations:

a/ Managing and using their capital and assets according to the provisions of law.

b/ Maintaining all safety-assurance rates in their operations under the State Bank’s guidance.

c/ Purchasing insurance for their assets according to the provisions of law.

d/ Joining deposit insurance organizations or system safety protection organizations according to the provisions of law.

e/ Accounting into their expenditures the reserves to offset risks that may occur in their operations, and using such reserves to offset risks according to regulations of the State Bank Governor.

6. All losses caused to assets of the people’s credit funds must be recorded in writing in order to determine the loss extent, causes and liability therefor and shall be dealt with on the following principles:

- If property losses are caused subjectively by collectives or individuals, the loss causers shall have to pay compensations therefor.

- Lost insured assets shall be dealt with under the insurance contracts.

- Reserves deducted into expenditures shall be used to cover asset losses according to the provisions at Point 5, Section I, Chapter II of this Circular.

- If the loss value, after being retrieved and covered by the above-said sources, still remains insufficient, it shall be covered by the financial reserve fund of people’s credit funds. If such financial reserve fund is not enough, the deficit shall be accounted into the expenditures arising in the period.

7. Sale and liquidation of assets

- The people’s credit funds are entitled to sell and liquidate their redundant assets, technically obsolete assets, inferior quality assets or irreparably damaged assets in order to retrieve capital for use for business purposes.

- When selling or liquidating their assets, the people’s credit funds shall have to set up councils to evaluate the real technical state and value of the assets.

- The difference between the proceeds from the sale or liquidation of assets and such assets’ residual value and expenses for such sale or liquidation shall be accounted into business results of the people’s credit funds.

8. The people’s credit funds shall have to manage, preserve or use assets they have hired, taken as pledge or mortgage according to the provisions of law and agreements with their customers.

II. MANAGEMENT OF TURNOVER AND EXPENSES

1. Turnover of a people’s credit fund includes the actual revenues from its business activities and other activities specified in Article 16 of the Government’s Decree No.166/1999/ND-CP of November 19, 1999, including the following revenues:

- Collected interest on loans provided to its customers.

- Collected deposit interest.

- Revenue from capital contribution and/or share purchase.

- Revenue from operations entrusted by organizations and/or individuals at home and abroad.

- Revenue from pledge service (if any).

- Other revenues, including proceeds from the asset, sale and/or liquidation.

The people’s credit funds shall have to fully and promptly account into their turnover charges paid by their customers for services they have provided. It is strictly prohibited to leave revenues out of accounting books or unaccounted into their incomes.

2. Management of expenses: Expenses of a people’s credit fund are amounts actually spent in a period for business activities and other activities, as guided below:

2.1. Expenses for professional operations include:

a/ Expenses for payment of deposit interest.

b/ Expenses for payment of loan interest.

c/ Expenses for payment of interest on capital sources entrusted by organizations and/or individuals at home and abroad.

d/ Other expenses for professional operations.

2.2. Management expenses of people’s credit funds

a/ Expenses for officials and employees working at the people’s credit funds

- Expenses being wages and wage allowances paid to officials working at the people’s credit funds.

Annually, the managing board of a people’s credit fund shall base itself on the resolution of the members’ congress to consider and decide the wage, allowance and working mission remuneration levels for the officials and employees in compatibility with the fund’s business results.

If the people’s credit funds have applied the labor contract or collective labor accord regime, the wages, remuneration’s and other amounts of wage or remuneration nature shall be determined according to labor contracts or collective labor accord.

If the people’s credit funds have not yet applied the labor contract or collective labor accord regime, the wages and/or remuneration’s to be paid to officials and employees working therein shall be based on the average income level of the branch and occupation prescribed by the local People’s Committees.

- Expenses being social insurance and medical insurance premiums and trade union operating fund for officials personally working in the people’s credit funds which must be contributed by the employers according to the State’s current regulations.

- Expenses on labor protection for subjects that need to be equipped with labor safety devices.

- Expenses for mid-shift meals for laborers, which are provided for by the people’s credit funds in compatibility with their business results. Expense level for each laborer must not exceed the minimum wage level prescribed by the State for State employees.

b/ Expenses on assets

- Expenses for depreciation of fixed assets used for business operation according to the regulations on fixed asset management, use and depreciation deduction promulgated by the Finance Ministry to be applicable to enterprises.

- Expenses for repairing fixed assets in order to restore their working capacity shall be directly accounted or gradually amortized into business costs in the year. Particularly for special fixed assets with expenses for the repair thereof arising unequally through periods or years, if the people’s credit funds wish to deduct in advance fixed asset repair expenses from their business costs, they shall have to work out plans for advance deduction of fixed asset repair expenses, then report them to the Finance Ministry for consideration and decision. After obtaining the written approval of the Finance Ministry, the people’s credit funds shall have to notify the directly managing tax authorities thereof. They shall have to make settlement of actually arising repair expenses against those deducted in advance. If the actually arising repair expenses are larger than the already deducted amount, the difference shall be directly accounted or gradually amortized into the period’s expenses. If the actually arising repair expenses are smaller than the already deducted amount, the difference shall be accounted into the period’s incomes.

- Expenses for asset hiring shall be accounted into the business costs according to the amounts actually paid in the year under the rent contracts. In cases where the asset rent is paid in lump-sum for many years, such rent shall be amortized into the business costs through the number of years of using the rented assets.

- Expenses for asset insurance premium.

- Expenses for fixed asset sale and liquidation (including the liquidated or sold fixed assets’ residual value).

c/ Expenses for payment of taxes, charges and/or payable land rental related to business activities (except for enterprise income tax), including: excise tax, land use tax or land rental, natural resources tax, bridge and ferry tolls, airfield fee, and other taxes and fees.

d/ Expenses for services purchased from outside:

- They are expenses for transportation, electricity, water, telephone, materials, printed papers, stationery, working tools, fire prevention and fight devices, and other services.

- The above-said expenses must be evidenced by valid vouchers or invoices according to the Finance Ministry’s regulations.

e/ Other expenses:

- Expenses for training of officials and employees working in the people’s credit funds including those for organizing training courses at the people’s credit funds and those for sending officials to training schools for training according to the regime prescribed by the State.

- Expenses for Party organization and mass organizations at the people’s credit funds shall be covered with the operation funding sources of such organizations. If the operation funding sources of such organizations are not enough, the deficit shall be accounted into the funds’ expenditures.

- Expenses for making up for asset losses, after such losses are covered by sources defined at Point 6, Section I, Chapter II of this Circular.

- Expenses for treasury operations.

- Expenses for guarding the office premises.

- Expenses for advertisement, marketing, sale promotion, guest reception, festive occasions, transactions, conference expense and other expenses, which must be evidenced by invoices and vouchers as prescribed by the Finance Ministry and are conducive to business results. The expense level must not exceed 7% of the total expenditures for the first 2 years of a newly established people’s credit fund, and 5% for the subsequent years.

2.3. Expenses for ensuring the safety of operation of the people’s credit funds

a/ Deductions for setting up reserves for operation of the people’s credit funds, made according to the provisions at Point 5, Section I, Chapter II of this Circular.

b/ Expenses for joining the deposit insurance or the system safety protection organization according to the provisions of law.

3. The people’s credit funds shall not be allowed to account into their expenditures the following amounts:

- Fines for violations of traffic, taxation, environment or labor legislation, breaches of the reporting, statistical, financial and accounting regimes and other legislations.

- Capital construction investments, expenses for procurement of tangible and intangible fixed assets, and support for other organizations and individuals.

- Working mission allowances in excess of the level prescribed by the State.

- Amounts covered by other funding sources, such as: public-service spending already funded by the State budget, superior agencies or other organizations; payment of interests on loans for capital construction investment until the completion of projects, such interest amounts shall be accounted into the capital construction investment expenses.

- Other unreasonable expenses.

III. PROFIT DISTRIBUTION AND DEDUCTIONS FOR SETTING UP FUNDS

1. Profit distribution

Profits of a people’s credit fund, after paying enterprise income tax according to the provisions of law, shall be distributed as follows:

- To make 5% deduction therefrom for setting up the charter capital supplementing reserve fund, the maximum level of such fund shall not exceed the charter capital of the people’s credit fund.

- To make up for losses of the preceding year and fines for law violations, which are not allowed to be accounted into pre-tax profits.

- The remainder, presumed 100%, shall be further distributed as follows:

+ A 10% deduction for setting up financial reserve fund. The balance of this fund must not exceed 25% of the people’s credit fund’s charter capital.

+ A minimum 30% deduction for setting up the professional operation promotion investment fund.

+ A 5% deduction for setting up the job severance reserve fund for employee working in the fund. The balance of this fund must not exceed 6 months’ actually paid wage amount in the year of the people’s credit fund.

+ Deduction for setting up reward and welfare funds, the annual deduction level for these two funds shall be projected by the managing board and considered and approved by the members’ congress.

+ Sharing of contributed capital’s interests to the members. The level of dividends shared to the members shall be based on the contributed capital shares, annually projected by the people’s credit fund’s managing board and considered and decided by the members’ congress, but must not exceed the average lending interest rate in the year of the people’s credit fund.

+ The remainder (if any) shall be added to the professional operation promotion investment fund.

2. Principles for use of funds

a/ The charter capital supplement reserve fund shall be used to supplement the charter capital.

b/ The professional operation promotion investment fund shall be used to invest in expanding the business operation scale, renewing facilities and equipment and improving working conditions of the people’s credit funds.

Depending on the investment demand and capability of the people’s credit funds, the funds’ managing boards shall decide the investment forms and measures on the principles of efficiency, safety and development of capital.

c/ The financial reserve fund shall be used to make up for the asset losses and damage occurring in the business operation course, after such losses and damage are covered by compensations of organizations and/or individuals that have caused them, indemnity paid by insurance organizations and risk reserves already deducted from expenditures.

d/ The job severance reserve fund shall be used to pay severance allowances to laborers, who have worked in the people’s credit funds for one year or more and are temporarily unemployed, according to the provisions of law; cover expenses for professional and technical re-training of laborers due to technological renewal or when they are transferred to new jobs, training of sideline jobs for female laborers of the people’s credit funds and professional skill fostering courses for officials and employees working in the people’s credit funds.

The severance allowance level for each specific case shall be decided by the managing boards of the people’s credit funds.

e/ The reward fund shall be used to:

Give year-end rewards or periodical rewards to officials and employees in the people’s credit funds. The reward level shall be decided by the funds’ managing boards at the proposals of the funds’ directors and trade unions (if any) on the basis of working productivity and achievements of each official or employee of the funds.

Give irregular rewards to individuals and/or collectives in the people’s credit funds that make technical innovations or professional operation process improvements, which yield efficiency in the funds’ business activities. The irregular reward level shall be decided by the managing boards of the people’s credit funds.

Reward the funds’ members; outside units and individuals that have economic relations with the funds and have well performed contractual terms, thus efficiently contributing to business operations of the people’s credit funds. The reward level shall be decided by the managing boards of the people’s credit fund.

e/ The welfare fund shall be used to:

Invest in construction or repair, supplement construction fund for welfare projects of the people’s credit funds.

Fund sport, cultural and public welfare activities of the collective of officials and employees and members of the people’s credit funds.

Contribute to the social welfare fund.

Pay regular and irregular difficulty allowances to officials, employees and members of the people’s credit funds.

Cover other welfare activities.

The people’s credit funds’ directors shall coordinate with the funds’ trade union executive committees (if any) in managing and using this fund.

IV. REGIMES OF ACCOUNTING, STATISTICS, AUDITING, REPORTING AND FINANCIAL PUBLICITY

1. The people’s credit funds shall implement the accounting and statistical regime prescribed by law, fully record initial vouchers, update accounting books and reflect financial activities in an adequate, prompt, truthful, accurate and objective manner.

2. A fiscal year of the people’s credit fund starts on January 1 and ends on December 31 of the calendar year.

3. The people’s credit funds shall make the financial settlement, fully observe the regulations on financial reports, make and submit them to the State finance, statistics and taxation agencies and the State Bank according to the provisions of the legislation on accounting and statistics and the provisions of this Circular.

3.1. A financial report contains:

- An account balance sheet and an asset balance sheet of the people’s credit fund.

- A report on business results and situation of remittance to the State budget.

3.2. The chairman of the managing board and the director of the people’s credit fund shall be responsible for the accuracy and truthfulness of these reports.

3.3. Reporting time limit

- A quarterly report shall be sent within 45 days after the end of a quarter.

- An annual report shall be sent within 60 days after the end of a fiscal year.

3.4. Report receiving agencies

The people’s credit funds shall send their financial reports to the provincial/municipal Finance-Pricing Services, statistical agency, directly managing tax agencies and the State Bank.

4. Auditing work

The people’s credit funds shall organize internal auditing by themselves to audit their own financial reports in compliance with provisions of the Law on Credit Institutions and in compatibility with their own operation scope and scale.

5. Financial publicity by people’s credit funds

- At the end of a fiscal year, besides making and sending financial reports to the State management agencies defined in Point 3 above, the people’s credit funds shall publicize their finance to local administrations and their capital-contributing members.

- The financial publicity’s content includes the following indicators:

+ The state of the charter capital, funds, mobilized capital, payable debts...

+ The capital use situation: fixed assets, loan debit balance, debt recovery situation...

+ Incomes and expenses: revenues, business operation costs, business results, situation on tax collection and remittance to the State budget; profits, projected profit distribution, deductions for setting up funds and sharing of contributed capital interest to the members.

+ Labor and incomes of officials and employees in people’s credit funds, the application of thrift practice, wastefulness and corruption combat measures in people’s credit funds.

- Financial publicity time limit: 120 days after the end of a fiscal year

V. FINANCIAL EXAMINATION AND INSPECTION AND HANDLING OF VIOLATIONS COMMITTED BY PEOPLE’S CREDIT FUNDS

1. The people’s credit funds shall take self-responsibility for the accuracy and truthfulness of their financial reports, the provincial/municipal finance and pricing services shall have to inspect the observance of the financial regime by people’s credit funds. The financial inspection shall be conducted in the following forms:

- Regular or irregular financial inspection.

- Inspection upon each specialized subject according to the requirements of the financial management work.

When deeming it necessary, the Finance Ministry shall conduct the inspection of observance of the financial regime by people’s credit fund according to the requirements of the State financial management work.

2. Handling of violations

- People’s credit funds that violate the State’s financial regime shall be handled according to the provisions of law.

- People’s credit funds that fail to observe or inadequately observe the regulations on financial reporting regime prescribed at Point 3, Section IV, Chapter II of this Circular shall be sanctioned according to provisions of the Government’s Decree No.49/1999/ND-CP of July 8, 1999 on sanctioning administrative violations in the accounting field.

Chapter III

ORGANIZATION OF IMPLEMENTATION

This Circular takes effect 15 days after its signing. All previous stipulations on financial management of people’s credit funds, which are contrary to this Circular, are now annulled.

Any problems arising in the course of implementation should be reported to the Finance Ministry for study, consideration and settlement.