CIRCULAR

GUIDING THE APPLICATION OF ENTERPRISE ADMINISTRATION ACCOUNTING

Pursuant to the Law on Accounting No. 03/2003/QH11 of June 17, 2003;

Pursuant to the Government's Decree No.129/2004/ND-CP detailing and guiding the implementation of a number of articles in the Law on Accounting in business;

Pursuant to the Government's Decree No. 77/2003/ND-CP of July 01, 2003 on defining the functions, tasks and powers and organizational structure of the Ministry of Finance.

Aiming to assist the producing and trading enterprises in sufficiently organizing accounting practice, the Ministry of Finance guides the enterprise administration accounting as follows:

Section 1: GENERAL PROVISIONS

1. Administration accounting

a) Administration accounting is the collection, processing, analysis and provision of economic and financial information basing on the management requirements and economic, financial decision within the accounting unit (Law on accounting, clause 3, Article 4).

Administration accounting provides the information about the internal operation of enterprises such as: costs of each part (expense centers), each work and product; analysis and assessment of the implementation process to compare with the plans on turnover, costs, profits; management of assets, supplies, capital, debts; analysis of the relation between costs, volume and profits; selection of appropriate information for short-term and long-term investment decisions; making budget estimates for production and business… in order to serve the management, inspection and issuing economic decision. Administration accounting is every enterprise’s task; the State only guides the principles, mode of organization and primary contents, methods of administration accounting to facilitate the implementation of enterprises.

b) The subjects receiving administration accounting information are the leader board of enterprise and persons participating in managing and operating the enterprise’s production and business activities.

Enterprises are not obliged to publicize the administration accounting information unless otherwise prescribed by law.

c) The calculation units used in administration accounting include: monetary unit, item unit, labor-time unit or other units depending on the management requirements of enterprise.

d) Principles of organizing the administration accounting information system: the organization of the administration accounting information system is not obliged to fully comply with the accounting principles and may be implemented under the internal regulations of enterprise in order to build an appropriate management information system for particular management requirements for each enterprise. Enterprises are entitled to decide on use accounting documents, organize the accounting book system, use and elaborate the accounting accounts, design the necessary administration accounting report forms for administration accounting of unit.

dd) Enterprises are entitled to use all information, figures of financial accounting to combine and serve for administrative accounting.

2. Subjects of application

This Circular is applicable to enterprises in the domain of production, business, trading and services;

For enterprises in the domain of finance and banking such as insurance enterprises, securities enterprises, securities fund management companies, credit institutions, financial organizations … shall apply the appropriate contents guided in this Circular.

3. Tasks of enterprise administrative accounting

a) Collecting, processing information and accounting figures under the scope and contents of the administration accounting of unit by each period.

b) Inspecting, supervising the norms, standards and estimates.

c) Providing information at the internal administration request of the unit by using administration accounting reports.

d) Analyzing the information serving requirement of making plan and issuing decision of the leader board of Enterprise.

4. Administration accounting contents, periods and scope

4.1. Administration accounting contents

a) Primary and popular contents of enterprise administration accounting include:

- Administration accounting of costs and product prices;

- Administration accounting of sales and business results;

- Analyzing the relation between costs, volume and profits;

- Selecting appropriate information for making decisions;

- Making budget estimate for production and business;

- Administration accounting of other items:

+ Administration accounting of fixed assets;

+ Administration accounting of inventory;

+ Administration accounting of labour and salaries;

+ Administration accounting of debts.

b) Apart from the primary contents above, enterprises may practice other administration accounting contents under the management requirements of enterprise.

4.2. The administration accounting scope is not limited and determined by the enterprises’ demand for administration accounting information in all stages of the organization and management of production, business, planning, inspection, operation, running, making decision and the level and capability of administration accounting operation of each enterprise.

4.3. The administration accounting periods commonly are month, quarter, year like financial accounting. Enterprises are entitled to determine other administration accounting periods (might be day, week or any period) depend on their requirement.

5. The terms in this Circular are construed as follows:

- Responsible center: is a division (workshop, production line; a department; a company or whole company) in one organization of which the manager is entitled to manage and responsible for arising incomes, costs or the investment capital used for the business activities.

- Cost center: is the responsible center of which the manager is entitled to manage arising expenses of the division under his/her management. A cost center might be a division (workshop, team, group…) or each operation period (rough processing stage, cutting stage, polishing stage…).

- Differential cost: is the cost that arises in this option but does not arise or partly arises in other options. The differential cost is one of the important bases for selecting investment options, or production, business options.

- Opportunity cost: is cost for the potential interests being lost due to the selection of one option (or action) to replace for the other one.

- Sunk cost: is the cost that enterprises must incur regardless of selected options or actions. The sunk cost exists in every option so the differential does not calculated and can be neglected when making comparison and selection of optimum options or actions.

- Variable costs: are production and business costs of which the total amount and ratio change proportionally to the variation in product load, including: direct material costs, direct labour costs and a number of general production costs such as: labour cost, electricity cost, fresh water cost, spare parts for repairing machine… The variable cost of one unit of product or work does not vary.

- Fixed costs: are costs of which the total amount does not vary to the variation in product volume and work load, including: depreciation costs of fixed asset, salaries of staff, managers… The fixed cost of one unit of product or work is inversely proportional to the product volume or work load.

- Interest on variable costs: are the difference between the turnover and the total variable cost (including the production cost by variable costs, variable costs of sales, and variable costs of enterprise management)

- Breakeven point: is a point where the turnover equals the total cost, or a point where the interest on the variable cost equals the total fixed costs.

- Short-term decisions: are the business decisions of which the term of validity, the limit time of influence and implementation are usually shorter than 1 year or 1 usual business period such as: Decisions on the existence or removal of a business division in the plan period; Decisions on project of material, products self production or externally purchase; Decisions on selling at the stage of semi-finished or finished products …)

- Long-term decisions: are decisions of which the term of validity the limit time of influence and implementation are longer than 1 year or 1 business period (Example such as Decisions on investment fixed assets in enterprises; Decisions on long-term financial investment;…)

- Appropriate information: is information that satisfies the two basic standards:

+ That information must relate to the future;

+ That information must contain the differences among the options being considered and selected.

Section II: ORGANIZING OF THE ADMINISTRATION ACCOUNTING IMPLEMENTATION

1. The organization of enterprise administration accounting implementation must satisfy the following requirements:

a) Punctually and fully provide the information at the cost management requirements for each work, division, project and product…;

b) Punctually and fully provide the information about implementation, norms, unit prices… serving the plan making, inspection, management and decision making;

c) Ensuring providing information is more detailed and specific than financial accounting;

d) Establishing appropriate principles and methods to ensure the comparability between financial accounting and administration accounting as well as among the operation periods, between the estimate and reality.

2. Organization of the enterprise administration accounting implementation under the following contents: organization of the utilization of accounting documents, books, accounts, organization of making the administration accounting reports, organization of the economic and financial information analysis.

3. Principles of organization utilizing accounting document

a/ Applying the principles and methods of establishing, circulating, managing and using accounting document consistently with the particular conditions of enterprises.

b) Specifying and adding the necessary contents to each prescribed form of accounting document to serve the collection of enterprise internal management information.

c) Using the initial documents, statistics documents of the management of enterprise production and business (Production orders, Volume statements; Decisions on labour transfer; Decisions on asset transfers; Investigation records on the production situation …) in order to practice administration accounting of production volume (or work load), working time, planning.

d) Allowed to design and utilize the internal documents used for administration accounting without State provisions (The Allocation calculation sheet of sale cost, enterprise management cost…); allowed to establish the system of rapid information collection and provision via email, fax and other means of information.

4. Principles of organizing the accounting accounts utilization

4.1. Enterprises shall base on the account system promulgated or approved for applying to enterprises by the Ministry of Finance to elaborate by levels (level 2, 3, 4) consistently with the plan and estimate, and request of providing information about enterprise administration accounting.

4.2. The detailing of the accounts level shall base on the following requirements:

a/ Aiming to satisfy the requirements of providing administration accounting information of each management level.

b/ The mutually related accounts must be ensure the uniformity of symbols, levels… (e.g. TK 15411, 51111, 63211, 91111…)

c/ The detailing of account must not falsify the content, structure and recording method of account.

4.3. Enterprises are allowed to open detailed account under levels in the following cases:

a/ Price calculation and production cost accounting by each work, product, article, production and business division…

b) Business result determination and sale accounting by each work, product, article, production and business division…

c) Inventory accounting by each kind, type.

d) Accounting of capital sources, loans, payable and receivable debts … by each subject and kind.

Besides, depending on the requirements for administration accounting information provisions, enterprises shall design in detail the appropriate accounts.

5. Principles of organizing the accounting book utilizing

a/ Enterprises shall base on the accounting book system promulgated or approved for applying to enterprises by the Ministry of Finance in order to supplement the particular norms, requirements for practicing enterprise administration accounting. The supplement or design of accounting book contents must not falsify the norms prescribed in the accounting books and must be consistent with enterprise management requirements.

b/ Enterprises may design new accounting books that are appropriate for the requirements of cost, turnover management and business result determination by divisions, articles, works and other requirements of administration accounting (The sheet of Product price calculation; Production report, Detailed sale book by customers… are made under the book form in the attached Annex)

6. Requirements and contents of administration accounting reports

6.1. Requirements for establishing administration accounting report system

a/ The administration accounting report system needs to be built consistently with the requirements of internal information provision of each particular enterprise.

b/ The contents of administration accounting report system must ensure the full provision and the comparability of the information serving the requirements for management and making economic decisions of enterprises.

c/ The norms in administration accounting reports needs to be designed consistently with the norms of plans, estimates and financial statements but might be changed under the management requirements of all levels.

6.2. Administration accounting report system

6.2.1. The primary administration accounting report system of an enterprise usually includes:

a/ Reports on the implementation progress:

- Report on turnovers, costs and profits of each kind of product, goods and service;

- Report on the volume of purchased and sold goods in the period by customers, prices, discounts and other sale promotion forms;

- Detailed report on the volume of finished, consumed products (services);

- Report on the observance of inventory norms;

- Report on the labour using and productivity;

- Detailed report on the finished products and works;

- Report on balancing of warehousing, ex-warehousing, inventory of material, raw material, products and goods;

- Detailed Report on receivable debts by terms, debtors and debt solvency;

- Detailed Report on the loans, payable debts by loan terms and creditors;

- Report for responsible center made by the division;

- Detailed Report on increases and decreases of equity capital

c) Analysis report:

- Analyzing the relation between costs, volume and profits;

- Analyzing the financial situation of the enterprise;

- Analyzing the factors affecting the implementation of production and financial plans;

Besides, basing on the management requirements of each particular period, enterprise may make other administration accounting reports.

6.2.2. A number of primary administration accounting reports forms: viewing in the attached annex.

7. Archiving administration accounting documents

The archiving of administration accounting documents, especially administration accounting reports that synthesize, analyze business results and strategies… shall be implemented under the decisions of the legal representative of the accounting unit on the basis of applying law provisions on archiving accounting documents.

Section III: PRIMARY CONTENTS OF ADMINISTRATION ACCOUNTING

1. Administration accounting of costs and product prices

1.1. Administration accounting of costs

Enterprises shall base on the operation characteristics and management requirements to gather costs by each cost arising center such as group, team, workshop, or by each work, product, production stage or the whole production processing, and determine the types of enterprise cost under the following contents:

1.1.1. Cost classification

The classification of enterprise cost serves the administration of the enterprise production and business activities. Therefore, the appropriate classification criteria shall be selected depending on the objectives and requirements of enterprise administration in each period and circumstance.

a/ Regarding to serving production, business cost and financial accounting, costs are classified under the following criteria:

-By economic contents, costs are classified in two types as:

+ Production cost: is the cost that constitutes the value of the product, including: direct material and raw material cost, direct labour cost, general production cost;

+ Non-production cost: is the cost that does not increase the value of the product but it is necessary for completing the production and business process, including: sale costs, enterprise management cost.

- By relation between the cost and the items in financial statements, the costs are classified as:

+ Period cost: is the cost arising in a business period (chronologically) and may relate to various subjects and products. Characteristic of Period costs is causing interest decreases in the business period in which such costs arise;

+ Product cost: is the cost that constitutes the value of the finished product unit being sold or inventory.

b/ Regarding to serving administrative accounting, production and business costs are classified under the following criteria:

- By the relation to the plan making and inspection, costs are classified as:

+ Variable cost;

+ Fixed cost;

+ Mixed cost: is the cost that includes both variable costs and fixed costs (e.g. telephone costs, costs for repairing and maintenance of fixed asset …)

By characteristics, costs are classified as:

+ Direct cost: is the cost that constitutes the products associated with a certain finished product or service (e.g. direct material and raw material costs; direct labour costs…);

+ Indirect cost: is the cost relating to various products or services without increasing the product or service value (e.g. administration management cost, salary costs of managers, staff…). Indirect costs must be allotted to every unit, product and work;

+ Controllable cost: is the cost of which the occurrence is able to be forecast by the managing level and under their deciding authority;

+ Uncontrollable cost: is the cost of which the occurrence is not able to be forecast by the managing level and concurrently outside their deciding authority.

c/ By requirements for cost utilization in the selection of investment projects, costs of a project are classified as following:

- Appropriate cost;

- Differential cost;

- Opportunity cost;

- Sunk cost.

1.1.2. Methods of cost gathering

Enterprises need to select appropriate methods of cost gathering for each kind of costs:

a/ Direct method: applicable to arising costs that only relate to one costed subject. By this method, costs of any subject shall be gathered directly for that subject only.

b/ Allocation method: applicable to arising costs that relate to various costed subjects. When carrying out the cost allocation method, enterprises may select one of the following allocation bases: working hour, working day, machinery operation hour, used area… and the allocation methods being direct methods or allocation methods under rank.

1.1.3. Identification of cost center

The identification of cost center depends on the production process and scale of each enterprise. The cost centers usually are classified as:

- Main centers such as: the goods purchase center, the production center (workshops and production divisions);

- Secondary centers such as: the center of administrative, management, the center of accounting, finance …

1.2. Administration accounting of product price

1.2.1. Methods of price calculation

Depending on the product characteristics or the relation between the cost accounting subjects and price calculating subjects, enterprises shall select a method or combine multiple methods to calculate product price.

The primary price calculation methods include:

a/ Method of price calculation by work and product

Price calculation by work (or product) is the gathering and allocation process of direct material and raw material costs, direct labour costs and general production costs relating to a separate work or product, or a particular group of products, a sales order:

+ Direct material and raw material costs, direct labour costs are directly gathered for each separate work and products;

+ General production costs: when the general production costs arising, they shall be gathered for works, products then implement allocation

When applying this method, enterprises shall base on the particular situation to select one of the general production cost allocation methods as follows:

+ Allocation of general production cost under actual level

By this method, enterprises shall adjust the difference between the estimated allocation amount and actual arising general costs recorded increase or decrease of “cost price of sold goods” in the period (if the difference is insignificant), or allot the difference amount to the costs of incomplete production and business, finished products and cost prices of sold goods proportionally to rate of balance (or the accumulated amount) of these accounts before allotting the difference of general production costs.

+ Estimating general production costs of each work, product… right at the beginning of the period, and adjusting the difference between the actual arising costs and the estimated general production costs at the end of the period.

b/ Method of price calculation by production process (cost summing method);

c/ Method of price calculation by norms;

d/ Coefficient methods;

dd) Cost exclusion method by the sub-products.

1.2.2. Subjects and period of price calculation

a/ Subjects of price calculation might be finished product details, finished products, group of finished products, particular works or prices of divisions, fields. Enterprises might base on one or a number of the following bases for determining the appropriate subjects of price calculation

+ The characteristics of production and management organization

+ The characteristics of the production technology process;

+ The conditions and level of accounting and enterprise management requirements.

b/ Price calculation periods are usually made by months, quarters or years. Enterprises shall base on the production form, production process and characteristics of production to determine the price calculation period. The price calculation period of single products is the time the single product is finished.

1.2.3. The product price calculation and production cost accounting shall follow this order:

+ Gathering costs (direct, indirect and allotted);

+ Summing up costs, settling deficit/surplus differences;

+ Inventorying, assessing incomplete products, identifying incomplete costs;

+ Determining the price calculation method be applied;

+ Making reports on product prices.

2. Administration accounting of sales and business results

2.1. Pricing the sale of product

a/ Enterprises shall price the sale of product on the principle: The price must sufficiently cover the cost and reach expected profits.

b/ Enterprises shall base on the circumstances, conditions and each type of sale prices (the sale price of common product, brand-new product, internal sale price, competitive sale price…) to select the basis for determining an appropriate sale price (e.g. basing on the production cost, the variable cost in the total cost of a products, the material and labour costs…)

Example: Determining the sale price basing on the production cost under the method of adding add the increasing rate into cost by the formula:

Price = Production cost of the product x (1 + % added)

Expected breakeven rate = Payback rate x Total investment capital

2.2. Administration accounting of sales and sales results

a/ Enterprises may organize the sale accounting by each form of sale and payment (instant payment, installment, sale via agents of barter), by each sale division (section 1, section 2…), by each product group and primary activity type. Enterprises may also organize sale accounting by combining multiple criteria depending on the management requirement and particular conditions and circumstances of the enterprise in each period.

b/ Enterprises need build the models of accounts, accounting books, reports of sale and sale results continually and flexibly in order to practice accounting in appropriate with sale cases in each period, satisfying the requirements for determining the enterprise production and business result.

3. Analyzing the relation among costs, volume and profits

The relation among cost, volume and profits is the relation among factors such as sale prices, volume (quantity and operation extent), structures of goods, costs (fixed and variable) and the impact of these factors on the enterprises’ profits

Enterprises need to analyze this relation via the system of analysis criteria including:

+ Interest calculated on unit variable costs (as known as Contribution margin);

+Total interest calculated on variable costs;

+ Interest rate calculated on variable costs;

+ Cost structure;

+ Economic lever;

+ Breakeven point (output, turnover, capacity, breakeven time…);

The analysis of this relation helps the enterprises to make decisions in production and business in order to maximize profits such as: selecting products and output, sale prices, cost norms.

4. Selecting appropriate information for decision making

Decision making is the basic function of enterprise administrators. The popular enterprise decisions include short-term decisions and long-term decisions.

4.1. Appropriate information for making short-term decisions

In order to select appropriate information for making short-term decisions, the enterprise administrative accountant needs follow these steps:

+ Collecting information (costs, turnovers) relating to the business plan that needs decisions;

+ Discarding the inappropriate information being sunk costs, similar costs (both quantitatively and qualitatively) and equivalent turnovers of the plans being considered;

+ Identifying the appropriate information;

+ Making decisions.

4.2. Appropriate information for making decisions on long-term investment

Decisions on long-term investment usually are: Decisions on investing in new assets or continuing using old assets; expanding production scale, renting or purchasing fixed assets; selecting other equipment in appropriate time…

In order to provide information for leaders to make decisions on investment, the administrative accountant needs implement works as following:

- Classify the decisions as:

+ Decisions with selective;

+ Decisions with priority.

- Collect and classify information consistently with the type of decisions.

- Selecting one of the appropriate methods to identify information (making investment projects) in appropriate with the type of decisions:

+ Payback period method;

+ Net present value method;

+ Method of profit arising rate adjusted by time;

+ Method of profitability index adjusted by time;

- Deciding to select a plan after obtaining appropriate information.

5. Making estimates of production and business budget

5.1. Requirements for making estimates of production and business budget

a/ The system of criteria for estimates of production and business budget shall be built separately for each process such as process of purchase, production, consumption of the enterprise production and business, and detailed for each content including: monetary capital, inventory; each kind of business operation cost: sale cost, enterprise management cost; each kind of summary report: Balance sheet, Business result report…

b/ The estimates for production and business budget shall be make for the whole year and divided into quarters and months. However, for the accuracy and feasibility of the estimate, enterprises shall make the estimate basing on the situation of estimate implementation at the end of the months and quarters and the influencing factors of the succeeding months and quarters.

Nevertheless, during the process of setting up each estimated norm, enterprises need refer to other estimated norms in order to form the system of estimated norms.

The system of estimated norms includes:

- Estimated norms of products, goods and services consumption;

- Estimated norms of products and services output;

- Estimated norms of production and service costs;

- Estimated norms of inventory;

- Estimated norms of sale costs;

- Estimated norms of enterprise management costs;

- Estimated norms of monetary capital;

- Estimated norms of business and production result Reports;

- Estimated norms of the balance sheet.

5.2. The order of making production and business budget estimates

a/ The divisions in the enterprise are directly responsible for making their own production and business budget estimates.

b/ The accounting department of the enterprise is responsible to sum up the estimates from the divisions to create the general budget estimates of the entire enterprise, and to organize meetings with relevant divisions to collect amending, supplementing opinions and complete the estimate.

c) Proposing to the enterprise leaders: after having opinion of leaders of enterprise, disseminating them to the divisions to implement.

6. Administration accounting of some other items

6.1. Administration accounting of fixed assets

a/ Enterprises need open and sum up the detailed accounting books to reflect the criteria of item values during the process of managing, utilizing and to analyze, assess the use efficiency of fixed asset of the entire unit, divisions and primary fixed asset subjects; and provide demand of using fixed assets of each division as well as the entire enterprises particularly in order to assist enterprise leaders basing on that to decide on options of exploiting existing fixed asset capacity, and of new investment appropriately, efficiently.

b/ Enterprises may also determine the fixed asset structure by appropriate fixed asset classification together with practice accounting of each subject of fixed assets in order to satisfy the requirements of providing information for making long-term investment plans of each period, analyzing the efficiency of fixed asset use as well as loss due to fixed assets use be not right purpose.

c/ Enterprises need determine the specific range of administration accounting organization in order to build models of appropriate accounting books of fixed assets, accounts or use financial accounting documents to analyze.

6.2. Administration accounting of inventory

a/ Enterprises need make the list of material and practice administration accounting of the quantity remaining, used and sold regarding both quantity and values consistent with the list of material, products and goods made under the enterprise internal management requirements.

b/ In order to reasonably account the quantity of used and in stock material, enterprises need determine the price calculation method in appropriate with particular condition and circumstance of enterprises, satisfying the management requirement as well as planning in the future.

c/ Enterprises shall establish norms for material and raw material costs of each work, products and establish reserve norms for each list of inventory.

d/ Comparing the established norms and the reality, making comment and proposal.

6.3. Administration accounting of labour and salaries

a/ Enterprises need implement the following works:

- Establish the norms for work hours and salary unit of worker and employees ranks;

- Establish the norms for spent labour costs for each stage of work, product and service…;

- Determine and control the working time of each employee;

- Fully calculate and allot labour costs to charges, cost centers and prices reasonably, appropriately.

b/ Method of implementation:

- Enterprises need design and operate well the system of timekeeping, salary calculation and salary payment sheets consistently with the cost and price centers.

- Applying appropriate accounting methods of labour cost (with each time and condition):

+ Direct method;

+ Allocation method: this method is applicable when the employee simultaneously participates in various works. Enterprises need select appropriate basis for allocation.

6.4. Administration accounting of debts

a/ The requirement of administration accounting of debts is ensuring of providing with information about creditors, payment terms, due time and debt quality at the manager’s request.

b/ Basing on the actual situation of the enterprise to design the accounts reflecting the debts by creditors, debtors and analyze the debt quality and payment terms, or reflect the debts by debt terms and analyze by creditors and debt quality

Section IV: ORGANIZING OF ACCOUNTING SYSTEM AND PERSON DOING ADMINISTRATION ACCOUNTING

1. Organizing administration accounting system

1.1. The organization of enterprise administration accounting system must be consistent with the operation characteristic, investment scale, production and business location of the enterprise, the hierarchical extent of economic – financial management of the enterprise. The accounting machine must be compact, scientific and highly efficient in providing information for the enterprise leadership system.

1.2. Enterprises shall base on their particular conditions (scale, level of officers, characteristic of production, business, management, technical facilities…) to organize the administration accounting system under one of the following forms:

a/ Combined form: Combine financial accounting and administration accounting by each accounting practicing section: accounting of production cost and price calculation, sale accounting… Accountants shall practice both financial accounting and administration accounting of the accounting section that they are following. Besides, enterprises must arrange personnel to practice other general administration accounting contents such as: collecting, analyzing information serving the making of estimates, and analyzing information serving the decision making in enterprise management accounting. These contents may assign general accountants or the chief accountant.

b/ Separate form: organizing an administration accounting division separately from the financial accounting division in the accounting department. This form is appropriate for large-scale enterprises such as parent companies or corporations…

c/ Mixed form: is the form combining with two above forms. For example: the administration accounting division of price costs is separate, the other contents are made under the combined form.

2. The person doing administration accounting

2.1. Enterprises need arrange person having sufficient capacity and level to do administration accounting on the basis of applying standards and conditions for accountants prescribed in the Law on Accounting.

In case the enterprise organizes the administration accounting division separately from the financial accounting division, the person doing administration accounting must satisfy the standards and have rights and responsibilities as follows:

a/ Standards of the person doing administration accounting:

+ Possessing professional ethics, being honest, incorruptible and having the sense of law observance;

+ Possessing professional accountancy qualifications.

b/ Powers of the person doing administration accounting:

The person doing administration accounting are entitled to be independent in their professional accountancy or statistic activities; to take the initiative in analyzing, assessment and proposal.

c/ Responsibilities of the person doing administration accounting:

The person doing administration accounting is responsible to observe the law provisions on accounting, carry out the allocated works and bear responsibilities for their professional work under the requirements of enterprise leaders. When the persons doing administration accounting are replaced, they are responsible to hand over the accounting documents and works to their successors and must be responsible for the accounting works in the period when they worked administration accounting.

2.2. Hiring administration accounting practice

Accounting units not being capable or unable to arrange personnel for administration accounting may hire person doing administration accounting under the following instruction:

- The accounting unit must enter into the contract with the accounting service enterprise or individuals that have registered to business accounting services to hire administration accounting practice as prescribed by law.

- The hiring of administration accounting practice must be made in written contracts as prescribed by law;

- The accounting units hiring administration accounting practice shall be responsible to fully, promptly and truthfully provide all the information, documents relating to the hiring and fully, promptly make payment for the accounting service charges as agreed in the contracts;

- Enterprises, individuals providing administration accounting services shall be responsible for the accounting figures and information as agreed in the contracts.

3. The chief accountant of the enterprise is responsible to organize the administration accounting practice and bear responsibilities before the leader board of enterprise for the provided administration accounting information and figures.

Section V: IMPLEMENTATION PROVISIONS

1. This Circular takes effect after 15 days as from its publication on the official gazette.

2. The enterprises shall base on the guidance in this Circular to organize appropriate and efficient administration accounting in the enterprises and the associate enterprises (for corporations), affiliated, dependent units (for companies).

3. On the basis of this Circular, the universities, academies, colleges, intermediate school of Economics – Finance – Accounting shall compose the appropriate curriculum on administrative accounting.