Thông tư 94/2013/TT-BTC

CIRCULAR

GUIDANCE ON FINANCIAL REGIME FOR PEOPLE’S CREDIT FUNDS

Pursuant to the Law on Credit Institutions dated June 16, 2010;

Pursuant to the Law on Cooperatives November 20, 2012

Pursuant to Decree No. 118/2008/ND-CP dated November 27, 2008 of the Government defining the functions, tasks, powers and organizational structure of the Ministry of Finance;

Pursuant to Decree No. 57/2012/ND-CP dated July 20, 2012 of the Government on the financial regime for credit institutions and foreign bank branches;

At the proposal of the Director of Department of Finance and financial institutions;

The Minister of Finance issues Circular guiding the financial regime for people's credit funds;

Chapter I

GENERAL PROVISIONS

Article 1. Scope of adjustment

1. This Circular guides the financial regime for people's credit funds;

2. The financial activities of the People's Credit Fund comply with the provisions of Decree No. 57/2012/ND-CP dated July 20, 2012 of the Government on the financial regime for credit institutions, foreign bank branches (hereinafter referred to as Decree No. 57/2012/ND-CP); the guidance contents in this Circular and other relevant legal documents on financial management.

Article 2. Subject of application

People's credit funds are established, organized and operating under the provisions of the Law on Credit Institutions No. 47/2010/QH12 dated June 16, 2010 and the Law on Cooperatives No. 23/2012/QH13 dated  November 20, 2012.

Chapter II

SPECIFIC PROVISIONS

Article 3. Owner’s equity of people's credit funds

1. Charter capital is the contributed capital of the members stated in the charter of people's credit funds.

2. Differences of exchange rate (if any) arising during the unfinished capital construction investment are accounted in the owner’s equity in accordance with regulations of law.

3. Difference upon asset revaluation is the difference between the book value of assets with the revaluation value of assets upon the state decision.

4. Additional reserve funds of charter capital, funds for professional development and financial reserve funds.

5. Undistributed profit.

6. Other capital owned by people's credit funds.

Article 4. Use of capital and assets

1. People's credit funds are responsible for the management, use and monitoring of all assets and capital available, performing the accounting in accordance with the current accounting regime, fully, accurately and promptly reflecting changes in capital and assets in the course of business, placing the responsibility and forms of treatment for each department or individual in case of damage or loss of assets and capital of funds.

2. People's credit funds may use working capital for business operation under the provisions of the Law on Credit Institutions, the Decree No.57/2012/ND-CP and specific guidance in this Circular under the principle of safety assurance and capital development.

a) During operations, the people's credit funds have to maintain the limit of construction investment, fixed asset purchase to directly serve the business operation on the principle that the residual value of fixed assets does not exceed 50% of the charter capital and additional reserve funds of charter capital.

b) For real estate held by the loan settlement as prescribed in Clause 3, Article 132 of the Law on Credit Institutions:

- For the real estate temporarily held by people's credit funds for sale or transfer to recover capital, the people's credit funds will not account to increase property, and not deduct depreciation.

- For the real estate re-purchased by people's credit funds to directly serve the business operation, the people's credit funds will account to increase property, and deduct depreciation as prescribed by law and ensure the limit of construction investment, purchase of fixed assets as specified at Point a, Clause 2 of this Article.

c) People's credit funds take the measures to ensure capital adequacy as prescribed in Article 8 of Decree No. 57/2012/ND-CP The provisions for expenses, the funds will comply with specific regulations as follows:

- For the provisions for risks in banking operation: People's credit funds will set up and use the provisions for risks as prescribed by the Governor of the State Bank of Vietnam after consultation with the Minister of Finance key.

- For the provisions for decline in inventory, provisions for loss of long-term investments (including devaluation of stocks ), provisions for doubtful debts (other than provisions for credit risk in banking operation) (if any): people's credit funds will set up provision ​​under general regulations applicable to enterprises.

d) For assets leased, pledged, mortgaged, preserved and kept on behalf of customers, the people's credit funds are responsible for management, preservation or use as agreed with the customers in accordance with regulation of law.

dd) Sale or disposal of assets

- The sale or disposal of the assets of people's credit funds complies with the law and the provisions of the charter of people's credit funds.

- People's credit funds may sell their assets to recover capital used for business purposes more effectively.

- People's credit funds may dispose assets of poor, degraded quality; damaged of assets without recovery, technically obsolete assets without the need for use or ineffective use without being sold with integrity, assets used in excess of their shelf life as prescribed and without further use. The people's credit funds must set up the disposal board upon asset disposal.

- For assets which must be auctioned upon sale, disposal as prescribed by law, the people's credit funds will hold the auction in accordance with regulations of law.

Article 5. Revenue management

1. Revenues of people's credit funds include the following incomings:

a) Revenues from business operation:

- Revenues from customers’ loan interests; revenues from deposit interests and other revenues from credit operation;

- Revenues from interests of capital contribution;

- Revenue from the provision of money transfer services, implementation of collection and payment operations on behalf of members.

- Revenues from other business activities.

b) Other revenues include:

- Revenues from trust, agent of a number of areas related to banking, asset management as prescribed by the State Bank of Vietnam;

- Revenues from the provision of advisory services on banking, finance for members;

- Revenues from the sale and disposal of fixed assets;

- Revenues from the loans processed by provisions for risk (including the debts forgiven now recovered);

- Revenues from payable debts whose creditors are lost or unidentified are recognized as an increase in income;

- Revenues from fines for customers, customers’ compensation due to breach of contracts;

- Revenues from compensated insurance money;

- Revenues from taxes paid now reduced or refunded;

- Revenues from refunded provisions for excessive provisions for risk (the amount to be deducted is lower than the amount deducted) but the reduced costs are not recorded as prescribed by law for provision of risk;

- Other revenues.

2. Revenue recognition principle

a) For credit activities

- Interests from credit activities:

People's credit funds account the interests receivable incurred in the period in the revenues of loans classified as eligible debts without any specific provision for risks as prescribed..

For the interests receivable in the period of the remaining debts, it is not necessary to account the income, the people's credit fund will monitor outside the balance sheet to urge the collection of interests. When the collection is done, these interests are recorded in business operation revenues.

- Revenues from deposit interest of deposit is the interest to be collected in the period.

b) Revenues from interest of capital contribution: dividends and profits shared from capital contribution are interests shared upon sharing resolution or decision.

c) For revenues from other activities: revenue is the entire proceeds from the sale of products, goods and services and service supply arising in the period accepted to pay by the customer after minus (-) the commercial discounts, decline in the price of goods sold and sales returns (if any valid documents) irrespective of whether or not the money is collected.

d) For revenues receivable accounted in the income but failed to collect in due time, the people's credit funds account the decreased revenue if the same accounting period or account in the costs if different accounting period and monitoring outside balance sheet to urge the collection. When the collection is done, these revenues are recorded in business operation revenues.

3. Revenues arising in the period of people's credit funds must have invoices or valid vouchers and must be fully accounted in revenues.

Article 6. Cost management

1. The costs of people's credit funds includes expenditures:

a) For business operation

- Payment of interest on deposits and loans;

- Capital contribution;

- Provision of money transfer services, implementation of collection and payment operations on behalf of members.

- Other business activities.

b) Payment of taxes, charges and fees, including taxes, charges and fees relating to land lease (excluding business income tax) as prescribed by law.

c) Expenditure for assets

- Depreciation of fixed assets used for business activities is carried out by the regulation on management, use and depreciation of fixed assets for enterprises.

In case of deferred purchase of fixed assets: the people's credit funds account the difference between the total amount payable and fixed asset purchase price to be paid at sight in the costs of the payment period except that the difference is included in the cost of fixed assets (capitalization) in accordance with accounting standards.

- Lease of fixed assets: Cost of lease of fixed assets shall comply with the lease contract. If the rent is paid once for many years, then the rent is amortized into the cost of business costs based on the number of year using the assets. For expenditures related to land lease not deductible from the rent as prescribed, the people's credit funds will allocate them into the costs based on the time of use of leased land.

- Maintenance of fixed assets;

- Repair of fixed assets;

- Procurement, repair tools and instruments;

- Asset insurance;

- Other expenditures of assets.

d) Expenditures of staff as prescribed by law, including:

- Salaries, wages and salary equivalence for staff working at people's credit fund include:

Salaries and allowances for full-time members of the Board of Directors, Supervisory Board; allowance for part-time member of the Board of Directors, Supervisory Board. The rate of expenditure is decided by the Board of Directors of people's credit funds on the basis of resolutions of the member General meeting.

Salaries and allowances paid to staff of the people's credit fund based the labor contract or collective labor agreement.

- Expenditures of salary-based contributions: Social insurance, health insurance, unemployment insurance, union funds.

- Allowances paid to employees in accordance with law for enterprises;

- Personal accident insurance;

- Eating expenditure;

- Expenditures for labor protection for those who need protective equipment while working;

- Expenditures for staff uniforms;

- Expenditures for female employees as prescribed by law;

- Medical expenditures include regular health examination for laborers, preventive medicines and other medical expenditures under enterprises’ responsibility in accordance with current regulations of law;

- Expenditures for annual leave as prescribed by law;

- Other expenditures for laborers as prescribed by law;

dd) Expenditures for management, public affairs include the following expenditures:

- Travel expenses;

- Electricity, water, telephone, printing paper, stationery, fuel and other materials;

- Treasury operations;

- Money transportation;

- Consultant and domestic and foreign expert hiring;

- Audit;

- Agent commissions and trust must be stated in the agent and trust contracts with adequate reasonable and valid documents;

- Deduction of scientific and technological development funds as prescribed by law. The use of funds complies with current regulations;

- Scientific and technological research: the insufficient expenditure after use of all funds for scientific and technological development;

- Training and professional training as prescribed by law;

- Creation development and application of new products and services provided by cooperative banks;

- Award for innovation and improvement to increase productivity, cost savings bonus: in accordance with the principle of actual efficiency, the people's credit funds shall build and publicize the regulations on awarding expenditures and set up a council for acceptance of initiatives;

- Fire prevention and fighting;

- Environmental protection. If the annual expenditure is large and effective for many years, it will be allocated for the following years;

- Expenditures for propagation, advertising, marketing, promotions, conferences, receptions, festivals and other expenditures as prescribed and there must be invoices and documents as prescribed by the Ministry of Finance with the business results of the people's credit funds;

- Brokerage commission: The expenditure for brokerage commissions of people's credit funds must be linked to economic efficiency brought by the brokerage. The people's Credit Funds shall base on their conditions and particular characteristics to formulate regulations on brokerage commissions in accordance with the provisions of applicable law to uniformly and publicly in the people's credit funds. The Board of Directors people's credit funds shall approve the regulations on brokerage commissions applicable for their units.

Beneficiaries of brokerage commissions are organizations and individuals (domestic and foreign) providing brokerage services for people's credit funds. Brokerage commissions are not applicable to the subjects as the agents of the designated customers, management titles and employees of People's Credit Funds.

The brokerage commissions must be based on contracts or certification between people's credit funds and the brokerage commission receiver, in which there must be basic contents: the name of the commission receiver, expenditure content and rate, method of payment, time of implementation and completion and the parties’ responsibilities.

For brokerage expenditures for asset lease (including foreclosed assets, debt bondage): the expenditure rate for asset lease brokerage of people's credit fund shall not exceed 2% of the total proceeds from the operation of asset lease brought by the brokerage of the year.

For expenditures for sale brokerage of mortaged or pledged assets, the rate of expenditure for sale brokerage of mortaged or pledged assets of the people's credit fund does not exceed 1% of the actual value received from the proceeds of sale of assets through brokerage.

- Expenditures for agency security, missions of militia, national defense and security.

e) Provisions for risk, deposit preservation and insurance;

- Only setting up provisions in the operation of people's credit funds in accordance with point c, Clause 2, Article 4 of this Circular;

- Costs involved in deposit preservation and insurance as prescribed by law.

g) Other expenditures

- Expenditures for fee payment of professional associations that people's credit funds have joined by the rate of fee specified by these associations;

- Expenditure for Party and Union missions at people's credit funds (the expenditure other than the funds of Party and Union organizations is from the specified source)

- Expenditures whose revenues have been accounted but failed to collect them without accounting for revenue decrease;

- Expenditures for debts payable with unidentified creditor accounted in the income but then the creditor is identified;

- Expenditures for sale, disposal of assets (if any) including the residual value of fixed assets disposed or sold;

- Expenditures for service fees for debt collection to agencies which are allowed to perform debt collection services in accordance with law; expenditures for recovery of forgiven debts and bad debt recovery costs;

- Expenditures for fine from administrative violation; penalty and compensation due to violation of economic contract under the responsibility of people's credit funds;

- Expenditures for handling of remaining asset loss after offsetting by sources as prescribed in Article 11 of Decree No. 57/2012/ND-CP;

- Expenditures for social affairs including the funds for health, education, natural disaster consequence recovery, houses of gratitude for the poor and other expenditures as prescribed by law;

- Expenditures for court fees and enforcement charges;

- Other expenditures.

2. Expense recognition principle

a) The expenses of the people's credit fund are the actual expenditures arising in the period related to business operations.

b) The expenses recorded in the business costs of people's credit funds must comply with the matching principle between revenues and expenses with all legal invoices and documents in accordance with the law.

3. People's credit funds must not include in the expenses with the following:

a) Fines for administrative violations individual must pay as prescribed by law;

b) Expenditures are not related to business operations of people's credit funds;

c) Expenditures without legal vouchers;

d) The expenditures have been accounted but not actually paid;

dd) Expenditures covered by other funding sources;

e) Unreasonable and invalid expenditures;

Article 7. Accounting currency

1. The determination of the accounting currency complies with the provisions of Article 18 of Decree No. 57/2012/ND-CP.

2. People's credit fund with the economic activity in foreign currency which must be converted into Vietnam dong as prescribed by law.

Article 8. Distribution of profit after business income tax

1. Profits shall be used to offset against the the previous years’ losses which are expired to be deducted from pre-tax profit of business income tax.

2. Deducting 5% from the additional reserve funds of charter capital of the People's Credit Fund. The maximum level of this fund shall not exceed the charter capital of the People's Credit Fund.

3. Deducting 5% from the financial provision fund. The maximum balance of the financial provision fund does not exceed 25% of the charter capital of the people's credit fund.

4. Deducting at least 20% from professional development investment fund;

5. Deducting from other funds decided by general meeting of members;

6. The remaining income after deducting funds as prescribed in Clause 1, 2, 3, 4 and 5 of this Article shall be distributed to the members of these funds based on the principle as follows:

a) Divided by contributed capital;

b) Divided according to the level of use of the product or service of people's credit funds;

c) The percentage and method of distribution are prescribed in the Charter of people's credit funds.

Article 9. Accounting regime, auditing, report and financial publicity

1. The people's credit funds perform the accounting regime as prescribed by law, fully recording original evidences, update accounting books and fully, promptly, truthfully, accurately and objectively reflect all economic and financial activities.

2. The fiscal year of the people's credit funds starts on January 01 and ends on December 31 of the calendar year.

3. The people's credit funds make ​​financial settlements, prepare and submit financial reports in accordance with this Circular.

Chairman of the Board of people's credit fund is responsible for the accuracy and truthfulness of these statements.

4. Contents of financial reports

a) The system of annual financial reports, interim financial reports and accounting reports of banks as prescribed by the State Bank of Vietnam for financial reporting regime for credit institutions.

b) Report on the implementation of obligations to the state budget (attached appendix).

c) Reports on the results of the audit of financial reports in accordance with the State Bank of Vietnam concerning the independent audit for people's credit funds.

d) Irregular reports: At the request of the authorities.

5. Time limit for report submission

a) Annual financial reports: within 90 days after the end of fiscal year.

People's credit funds shall submit their annual financial reports which have been audited with the conclusions of the independent auditors (audit report) immediately after the end of the audit.

b) Interim financial report of: at least on the 30^th of the first month of the following quarter.

c) The time limit for submission of report on implementing obligations to the state is within 90 days after the end of fiscal year for annual reports and no later than the 30^th of the first month of the following quarter for interim reports.

d) The time limit for submission of report on results of audited annual financial reports right after the end of the audit.

6. Report receiving place

Service of Finance and branches of State Bank of Vietnam in provinces and cities where the people's credit funds are located.

Article 10. Inspection and handling of financial violations

1. Form of financial insepction

The financial insepction is done in the following forms:

a) Periodical or irregular inspection.

b) Inspection by special subject on the requirements of tasks of financial management.

2. Agency performing financial inspection

a) Branches of State Bank of Vietnam in provinces and cities where the people's credit funds are located.

- Performing comprehensive inspection, examination and monitoring of activities of people's credit funds including financial activities.

- Notifying Services of Finance of provinces and cities where people's credit funds are located of violations and problems related to the implementation of the financial management regime of the people's credit fund detected in the process of inspection, examination and monitoring for settlement coordination.

b) Services of Finance of provinces and cities where people's credit funds are located

- Performing financial inspection as prescribed by current regulations of law on financial inspection.

- Examining issues related to the financial management and the compliance with financial regime of people's credit funds.

- Notifying branches of State Bank of Vietnam in provinces and cities where the people's credit funds are located of the results of inspection and examination for settlement coordination.

c) Services of Finance, branches of State Bank of Vietnam in provinces and cities where the people's credit funds are located are responsible for notifying the Ministry of Finance of problems arising during the process of inspecting and examining people's credit funds related to the financial regime so that the Ministry of Finance may study and improve the financial regime of people's credit funds.

3. Handling of violation

People's credit funds violating the State financial regime and financial report regime shall be handled as prescribed.

Chapter III

IMPLEMENTATION ORGANIZATION

Article 11. Effect

1. This Circular takes effect on September 01, 2013 and applies for the fiscal year 2013.

2. This Circular supersedes Circular No. 62/2006/TT-BTC dated June 29, 2006 of the Ministry of Finance guiding the implementation of financial regime for grassroots people's credit funds.

3. Any difficulty arising during the course of implementation should be reported to the Ministry of Finance for consideration and settlement./.