CIRCULAR No CIRCULAR No. 109/2001/TT-BTC OF DECEMBER 31, 2001, GUIDING THE ACCOUNTING OF THE RECEPTION AND USE OF NON-REFUNDABLE AIDS In furtherance of the Government�s Decree No. 17/2001/ND-CP of May 4, 2001 promulgating the Regulation on management and use of the official development assistance sources; the Prime Minister�s Decision No. 64/2001/QD-TTg of April 26, 2001 promulgating the Regulation on management and use of aids provided by foreign non-governmental organizations; The Ministry of Finance hereby guides the accounting and settlement of non-refundable aids by units which receive and use non-refundable aids, as follows: I. GENERAL PROVISIONS 1. Non-refundable aids constitute a source of State budget revenue and must be accounted into the budget and settled according to the State Budget contents. The non-refundable aids include: Aids in Vietnamese currency, foreign currencies, commodity, assets in form of aid programs, projects in the non-business and administrative fields and capital construction investment or non-programs, - projects of humanitarian nature, which are approved by competent authorities, and the emergency relief as well as aid for overcoming consequences of natural disasters. 2. The ministries, commissions, branches, mass organizations, social organizations of the central and local levels, the Finance-Pricing Services of the provinces and centrally-run cities, aid project- managing boards and units receiving and using non-refundable aids (hereinafter called units for short) shall all have to account fully, accurately and promptly the received and used aid amounts and settle the aid sources like the source of allocated State budget funds according to the provisions of the current accounting regime and the provisions of this Circular. 3. In accounting non-refundable aids, Vietnam Dong must be used as the currency unit. In case of foreign currencies, such foreign currencies must be converted into Vietnam Dong at the accounting exchange rates announced by the Ministry of Finance in each period or at the exchange rates prescribed by the Commercial Bank at the time of converting the currencies provided by the donors. For aids in kind, they must be accounted in quantity and value of the aid goods on the basis of the goods prices in foreign currencies for conversion into Vietnam Dong. Where the aid goods have no prices, the pricing council shall base itself on the actual conditions of the goods and the prices of similar goods items imported in the same period to determine the prices. 4. Accounting objects: The aid-receiving units shall only account the amounts of aid money and goods they have actually received from foreign countries, including Vietnamese currency, foreign currencies, assets and goods certified by the Ministry of Finance as aids, and shall not account the aid amounts spent directly by foreign parties on experts, consultants, training, study tours, surveys, practices and other amounts spent abroad without vouchers to determine the above-said expenditures. 5. Aid-receiving units must open accounting books and make financial reports like accounting of allocated State budget funds and monitor the reception, use and settlement of foreign aid sources, the budget-allocated reciprocal sources, the self-supplemented sources according to the State Budget Contents. For aid-receiving units which are required by the donors to submit vouchers (the originals) and to make the financial reports according to forms set by the donors, they must additionally open accounting books and make the financial reports as provided for by the donors. Before submitting the originals of vouchers to the donors, the units must photocopy each voucher with certification by the unit heads. Those copied vouchers certified by the unit heads shall be considered lawful and valid vouchers which shall serve as basis for accounting the reception, use and settlement of the revenue sources and the use of aids by the units. 6. Organizing the accounting work: Depending on the organization of each aid program and/or project by ministries, branches, mass organizations and social organizations (hereinafter called the ministries and branches for short) and localities, the accounting of aid projects shall be organized at the ministries, branches, provincial/municipal Services and project-executing units as follows: 6.1. For ministries, branches, managing Services: The Finance and Planning Departments or Boards of the ministries and branches, or the Finance- Accounting Sections (Finance-Planning Sections) of the managing Services shall have to organize the synthesis of financial reports and settlement reports of all programs and projects on aids received by the ministries, branches and managing Services for settling the aid sources with the Ministry of Finance (for projects with central agencies being the project owners) or the provincial/municipal Finance-Pricing Services (for projects with the localities being the project owners). Where the aid projects have their owners being the localities, the provincial/municipal Finance and Pricing Services must record as budget revenues and expenditures the foreign aid sources and monitor, inspect, consider and approve the settlement of revenue and use of aid amounts of these aid programs and projects. Where the aid projects have their owners being central agencies and the (mini) project executors being local agencies, the financial relationships shall be determined according to the two following cases: a) Where the Central or Provincial Project Management Boards receive aid money and/or goods then distribute them to project-executing units in localities or the provincial/district project-executing units receive aid money and/or goods directly from donors, the financial relationship between the Central or Provincial Project Management Boards and the project-executing units in localities is the superior- subordinate relationship. The superior project management boards or the coordinating agencies shall have to synthesize the settlement of mini-projects in localities. When distributing aid money and/or goods to mini-projects in localities, they shall account them through Account "Funds allocated to the subordinates," then incorporate all the received aid sources into Account "Funding sources" and account the use of aid sources for mini-projects into Account "Funding expenditure." The units executing projects (mini-projects) in localities, after receiving aid money and/or goods from the superior project management boards or directly from donors shall have to reflect them into Account "Funding sources" and the aid money and/or goods expenditures into Account "Funding expenditure." The aid money and/or goods amounts received directly from donors, after the completion of the procedures for aid certification, must be reported to the superior project management boards. The process of spending and using aid money and/or goods must be recorded in reports to be sent to the superior project management boards for sum up into the settlement of the entire projects. The order of making reports on final settlement of completed projects shall comply with the provisions in Circular No. 70/2001/TT-BTC of August 24, 2001 of the Ministry of Finance. b) Where the central agencies act as project owners or the coordinating agencies while the local agencies execute the projects: When the central project management boards or the coordinating agencies receive aid sources and transfer the aid money and/or goods to units executing projects in localities while the Ministry of Finance has already carried out the budget spending procedures for the localities, the units executing projects in localities shall have to report on the process of receiving and using aid money and/or goods to the managing provincial/municipal Services so that the latter sum up the final settlement with the Finance-Pricing Services of provinces or centrally-run cities. The central project management boards or the coordinating agencies shall base themselves on the aid money and/or goods amounts already received and distributed to units executing projects in localities to make reports on final settlement with the Ministry of Finance. 6.2. For aid-receiving units: a/ Units receiving non-project aids must account the aid money and/or goods on the same systems of their current accounting books and make the final settlement reports then submit them to their managing agencies as provided for in this Circular. b) Units receiving aids under projects (including capital construction projects), which do not set up their own accounting sections, shall monitor the aid money and/or goods on the same system of their accounting books as a source of budget fund allocated to aid programs or projects and account them into Account "Funding sources" (detailed according to each aid program or project) and Account "Funding expendidure" (detailed according to each aid program or project and each funding source), make the financial statements according to the provisions of the current Accounting Regime and the provisions of this Circular on making final settlement reports for submission to the managing agencies. c) For units receiving aids under projects and having their separate accounting sections set up by decisions of competent authorities to manage, receive, use and settle the aid sources, such accounting sections must base themselves on the characteristics of their units� operations to use appropriate vouchers, accounting books, book-keeping accounts and make necessary and proper financial statements: - In case of non-business and administrative projects, the accounting shall comply with the Non-Business and Administrative Accounting Regime issued together with Decision No. 999/TC/QD-CDKT of November 2, 1996 of the Finance Minister and the provisions of this Circular. - In case of investment projects on capital construction, for which the project management boards organize the separate accounting of the capital construction investment, the accounting shall comply with the investing units� accounting regime issued together with the Finance Minister�s Decision No. 214/2000/QD-BTC of December 28, 2000 and with the provisions of this Circular. 7. The aid-receiving units shall have to arrange accountants with professional qualifications on financial and accounting operations to monitor the reception, use and settlement of aid sources. II. SPECIFIC PROVISIONS 1. Supplementing and amending the non-business and administrative accounting regime promulgated together with the Finance Minister�s Decision No. 999/TC/QD-CDKT of November 2, 1996 1.1. Amending the methods of classifying the aid funding sources from non-budget sources into the budget funding sources and aid details according to the provisions in Circular No. 70/2001/TT-BTC of August 24, 2001 of the Ministry of Finance guiding the regime of State financial management over the non-refundable aid sources. 1.2. Adding more accounting vouchers: - The written certification of aid goods; - The written certification of aid money; - The list of original vouchers sent to donors; - The written request to record the budget revenue- expenditure of aid money and goods. The codes of the above four accounting vouchers shall be the same as those prescribed in Circular No. 70/2001/TT-BTC of August 24, 2001 of the Ministry of Finance. - The detailed list of participants in seminars, training courses; - The general expenditure settlement; (The codes and forms of the above two vouchers shall comply with the attached annex). 1.3. Adding one more account Account 313 "Loans": This account is used to reflect loans and the situation of loan recovery from projects with credit activities. Account 313 must monitor in detail each borrowing subject. Structure and contents of account 313- loans The Debit: - The money amounts already lent The Credit: - The loan amounts already recovered - The loan amounts written off by donors� permission. The Debit balance: - The loan amounts not yet recovered, not yet handled. This Account consists of three grade-2 accounts: - Account 3131- Loans: This Account is used to reflect loans and the situation of recovering such loans. - Account 3132- Overdue: This Account is used to reflect loans which have become mature but cannot be repaid by the borrowers and have been transferred into overdue debts. - Account 3133- Debt freezing: This Account is used to reflect the loan amounts which the borrowers are unable to repay or meet with risks in the process of capital use and are frozen, awaiting the handling. When accounting this account, attention should be paid to the following: - Effecting the lending strictly according to the projects� objectives; - The provision of loans, the recovery of loan debts and lending interests� must strictly comply with the provisions of the project documents, and at the same time the loan amounts, the overdue debt amounts, the amounts allowed to be frozen or forgiven for cases of meeting with risks in the use of borrowed capital (natural disasters, fire�) must be clearly accounted. 1.4. Adding and guiding the use of accounting books: a) For aid projects involving credit activities, rotating capital for loans according to the objectives of aid programs, to add "Loan- monitoring book" in order to monitor loan amounts lent from the lending fund and the recovery of loan capital (the principals). (The structure, contents and method or entering the "Loan- monitoring book" shall comply with the attached annexes) (*) . b) For aid sources received from foreign countries, form S41-H "Funding source- monitoring book" and form S42a-H "Non-quota funding- monitoring book" shall be used to monitor the reception of aid sources from foreign countries. c) For the budget funding amounts allocated as reciprocal capital (allocated with funding quotas), forms S41-H "Funding source- monitoring book", S41a-H "Summing up funding source details" and S42-H "Funding quota- monitoring book" shall be used to monitor the reception of budget reciprocal funding allocated for aid projects. d) For the detailed accounting of aid project expenditures, form S63-H "Book on project expenditure details" shall be sued to monitor the project expenditures according to each project, the project�s objectives and details of the State Budget Contents. 1.5. Amending, supplementing forms of financial statement a) Amending the following forms of financial statement: - Form B02-H "Summing up the funding situation and settlement of already used funding": Amending column "aid funding outside the budget" by incorporating it into the budget and dividing it into two columns "allocated budget" and "aid." - Form F02- 2H "Project funding details proposed to be settled": Adding some norms to the first section: Agencies executing projects with the approved funding amount and dividing it into Chapter, Type, Clause, Items according the State Budget Contents. b) Adding some following forms of report + Report on reception and use of non-refundable aid (Form No. B06-DA); + Report on situation of loan provision, debt recovery, interest recovery (Form B07-DA). 2. Methods of accounting major economic operations related to the reception and use of non-refundable aids under non-business and administrative projects 2.1. For non-project aid amounts For non-project aid amounts, to organize the accounting on the same system of accounting books of the non-business and administrative units and add the vouchers, accounts, accounting books, financial statements as guided in Section 1, Part II, and make entries according to the following stipulations: a) Aids being goods, supplies, fixed assets: - Upon receiving aids being goods, supplies and/or fixed assets, on the basis of the written certification of aid goods, to make the warehousing bills or the records on hand-over of fixed assets, the accountants shall record: Debit Account 152- Materials, tools (Aid goods details) Debit Account 211- Tangible fixed assets Credit Account 461- Operation funding sources (4612) (details of aid funding sources) Particularly for fixed assets, based on the hand-over records, to make book entry as increase of funding source formulating fixed assets and operation expenditure, the accountants shall record: Debit Account 661- Operation expenditure (6612) (Details of aid funding expenditure) Credit Account 466- Funding sources having already formulated fixed assets - When ex-warehousing aid supplies and/or goods for use, based on the ex-warehousing bills, the accountants shall record: Debit Account 661- Operation expenditure (6612) (Details of aid funding expenditure) Credit Account 152- Materials, tools (Details of aid goods) - When ex-warehousing aid goods for exchange with other units: + Based on the competent authorities� decisions permitting the goods exchange to make the ex-warehousing bills, the accountants shall record: Debit Account 311- Amounts to be recovered (3118) (Goods exchange details) Credit Account 152. Materials, tools (Aid goods details) + Based on the received volume of exchanged goods, the accountants make ex-warehousing bills, recording: Debit Account 152- Materials, tools (Aid goods details) Credit Account 311- Amounts to be recovered (3118) (Goods exchange details). - Where aid goods need to be converted into money, the aid goods managing agencies shall organize the sale thereof for money and transfer the money amounts to using units. The using units shall account them like the case of receiving aids in cash. - Where aids being investment projects on capital construction (the foreign parties hire contractors to build the projects and hand them over to the Vietnamese party), based on the records on project hand-over, the accountants shall record: Debit Account 211- Tangible fixed assets Credit Account 466- Funding sources which have formulated fixed assets b) Aids in cash: - Upon receiving aids in cash, based on the money amounts actually received to make the revenue bills, the accountants shall record: Debit Account 111- Cash Credit Account 461- Operation funding sources (4612) (Aid funding details). - Upon receiving aids through account transfer, based on the Credit Notices of the banks or treasuries, the accountants shall record; Debit Account 112- Money deposits at banks, treasuries Credit Account 461- Operation funding sources (4612) (Aid funding details). - When spending aid sources on activities according to the projects� objectives, the accountants shall record: Debit Account 661- Operation expenditure (6612) (Aid funding expenditure details) Debit Account 152- Materials, tools (Purchase of warehoused materials, tools) Debit Account 312- Advance (Advances paid from funds) Debit Account 331- Payable amounts Credit Account 111- Cash Credit Account 112- Money deposits at banks, treasuries. - Cases of purchasing fixed assets with aid money: + Based on fixed asset purchase invoices, to make record on asset hand-over, the accountants shall record: Debit Account 211- Tangible fixed assets Credit Account 111- Cash Credit Account 112- Money deposits at banks, treasuries + At the same time, entering the increase of funding sources which formulate the fixed assets and operation expenditures, the accountants shall record: Debit Account 661- Operation expenditures (6612) (Aid funding expenditure details) Credit Account 466- Funding sources having already formulated fixed assets. c) Aid in foreign currencies - Upon receiving aids in foreign currencies, the accountants shall record: Debit Account 111- Cash (The exchange rates announced by the Finance Ministry) Debit Account 112- Money deposits at banks, treasuries (The exchange rates announced by the Finance Ministry). Credit Account 461- Operation funding sources (4612) (Aid funding source details) - When buying materials, equipment, tools, fixed assets with aid money: + Where the average exchange rates on the inter-bank marke

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