Summary of new provisions enshrined in the Circular No. 200/2014/TT-BTC on the corporate accounting system

I. PERMISSION TO USE A FOREIGN CURRENCY AS AN ACCOUNTING CURRENCY UNIT

Enterprises that mainly use the foreign currency for carrying out their business transactions and conform to all of the standards stipulated by Article 4 of this Circular will be entitled to choose one foreign currency unit as their accounting currency unit.

The enterprise that uses a foreign currency as their accounting currency unit, in addition to creating their financial statement in the foreign currency unit, will be obliged to convert this foreign currency unit into Vietnamese dong to be used in such financial statement as well.

The lawful financial statement to be made known to the public and submitted to Vietnam’s competent authorities must be the one presented in Vietnamese dong. 

The change of an accounting currency unit, if such change does not conform to the accounting standards stipulated by Article 4 of this Circular, will be only permitted to take place at the beginning of a new accounting year.

II. ACCOUNTING ENTRY

1. There will be no distinction between short-term or long-term Asset accounts. 

2. Omitting accounts such as 129, 139, 142, 144, 159, 311, 315, 342, 351, 415, 431, 512, 531, 532, and off-balance sheet accounts.

3. Adding the following accounts:

Account 171 – Purchase or resale of the Government bonds

Account 353 – Bonus and welfare fund

Account 356 – Science and technology development fund

Account 357 - Price stabilization fund

Account 417 – Corporate restructuring fund

4. Changing the following accounts:

Account 121 – Trading securities (previously called Short-term investments)

Account 128 – Held-to-maturity investments (previously called Other short-term investments)

Account 222 – Investments in joint ventures and associates (previously called Capital contribution in a joint venture)

Account 228 – Other investments (previously called Other long-term investments)

Account 229 – Provisions for asset damage or loss (previously called Provisions for depreciation on long-term investments)

Account 242 – Prepaid expenses (previously called Long-term prepaid expenses)

Account 244 – Pledges, collateral, deposits, guarantees (previously called Long-term deposits, guarantees)

Account 341 – Loans and financial obligations (previously called long-term loans)

Account 343 – Receipt of deposits, guarantees (previously called Receipt of long-term deposits, guarantees)

Account 411 – Owner’s investments (previously called Operating capital)

Account 421 - Undistributed after-tax profits (previously called Undistributed profits)

Account 521 – Revenue deductions (previously called Consolidated account generated from accounts 521, 531, 532)

5. Specific guidance on the accounting principles for each account type is provided.

III. FINANCIAL STATEMENT

1. The entry “Taxes and accounts payable to the State” is removed from the obligatory information provided in the financial statement.

2. The mid-year financial statement encompasses the quarterly financial statement (4^thquarter included) and the half-year financial statement (the quarterly financial statement, exclusive of 4^thquarter, previously required).

3. New provisions on the Formulation of accounting principles and financial statements will be additionally provided in case the enterprise fails to conform to the presumption about regular operations (Article 106).

4. Multiple amendments to the balance sheet are made as follows:

Code 120 = Code 121 + 122 +123 (previously 121 + 129) 

Code 130 = 131 + 132 + 133 + 134 + 135 +136 +137 +139 (code 136, 137 previously missed out)

Code 150 = 151 + 152 +153 +154 + 155 (code 136, 137 previously missed out but code 158 previously available)

Code 200 = 210 + 220 + 230 + 240 +250 +260 (code 230 previously missed out)

5. There are multiple amendments to the information included in the Notes to the financial statement as follows:

- Corporate operating characteristics: normal manufacturing and business cycle; corporate structure.

- Applicable accounting policies: the enterprise that conforms to the presumption about regular operations and the one that fails to do so.

- Items presented in the balance sheet: bad debts; loans and financial obligations; work-in-progress or unfinished long-term assets, etc.

IV. ACCOUNTING DOCUMENT

The enterprise is given more autonomy to formulate and design its accounting document formats and this must meet requirements stipulated in the Accounting Law, and ensure clarity and transparency.

Accounting document types shown in the Appendix 3 of the Circular are used for reference only. If the enterprise does not formulate and design their own formats, they can adopt the types shown in the Appendix 3.

V. ACCOUNTING RECORD

The enterprise is entitled to design their own accounting record templates and this is required to ensure that the information about business transactions shall be provided in a transparent and sufficient manner. If the enterprise does not formulate or design their own templates, they can adopt the accounting record template shown in the Appendix 4 of the Circular.

Furthermore, the Circular also provides a new provision on how account balances recorded in accounting records are carried forward.      

This Circular takes effect from February 5, 2015 and applies to accounting operations conducted in the fiscal year that begins on or after January 1, 2015.