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NATIONAL ASSEMBLY SOCIALIST REPUBLIC OF VIETNAMIndependence – Freedom - Happiness

Law No. 03/2003/QH11

NATIONAL ASSEMBLY

OF THE SOCIALIST REPUBLIC OF VIETNAM

3rd Session, XIth Legislature(from 3 May 2003 to 17 June 2003)

LAW ON ACCOUNTING

With a view to exercising uniform management of accounting practice, ensuring that accounting will be an effective tool for managing and overseeing financial and economic activities, provide sufficient, accurate, timely and transparent information, and meet the organizational, managerial and executive requirements of State agencies, enterprises, organizations and individuals; and

Pursuant to the 1992 Constitution of the Socialist Republic of Vietnam, which was amended and supplemented by Resolution No. 51/2001/QHX dated 25 December 2001 of the 10th session of the National Assembly (Xth Legislature);

This Law prescribes accounting.

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulation

This Law provides for contents concerning accounting practice and organization, accountants and activities of the profession.

Article 2. Subjects of application

1. Subject to this Law shall be the following:a. State agencies, not-for-profit entities and other organizations using funds from the

State budget;b. Not-for-profit entities and organizations which do not use funds from the State

budget; c. Business entities of all economic sectors, which are established and operate in

accordance with Vietnamese laws; branches and representative offices of foreign enterprises operating in Vietnam.

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d. Co-operatives; e. Household businesses; collectives;f. Accountants and those involved in accountancy.

2. With regard to representative offices of foreign enterprises, household businesses and collectives, the Government shall provide for the contents of accounting work according to the underlying principles of this law.

Article 3. Application of international conventions

Where an international convention to which the Socialist Republic of Vietnam is a signatory or participant contains provisions other than those prescribed herein, the provisions of this international convention shall prevail.

Article 4. Definition of terms

In this Law, the terms below shall be construed as follows:1. “Accounting” is the collection, processing, analysis and provision of financial and

economic information in terms of money, goods, and worked time;2. “Financial accounting” means the collection, processing, analysis and provision of

financial and economic information in the form of financial statements to those having demand for information of the accounting entity;

3. “Managerial accounting” means the collection, processing, analysis and provision of financial and economic information for the accounting entity’s internal management and decision-making purposes.

4. “Financial and economic transactions” refers to activities from which the accounting entity’s assets and resources increase and/or decrease;

5. “Accounting entity” is an entity which meet the definition in clauses 1, 2, and 3 of Article 2 of this Law, and by which financial statements are prepared at the end of an accounting period;

6. “Accounting period” is a period defined as spanning from the date on which an accounting entity begins keeping records in its accounting books to the date it stops such recording and closes accounting books for preparation of financial statements;

7. “Accounting vouchers” are papers and objects which carry information on financial and economic transactions arisen and completed and which underlie recording in the accounting books;

8. “Accounting documents” are accounting vouchers, accounting books, financial statements, managerial accounting reports, audit reports, accounting investigation reports and other related documents;

9. “Accounting system” is a set of accounting rules and guidelines on a particular field of business and group of tasks, which are issued by State management agencies in charge of accounting or organizations authorized to do so;

10. “Accounting investigation” is the examination and assessment of the accounting entity’s compliance with legal requirements on accounting, and of the integrity and accuracy of accounting data and information;

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11. “Accounting practice” refers to the act of providing accounting services by organizations and individuals who are eligible and competent to render accounting services.

12. “Bookkeeping forms” are accounting book formats and bookkeeping procedures and methods and the connection among these accounting books.

13. “Accounting method” refers to specific procedures and manners in which respective accounting work is performed.

Article 5. Accounting tasks

1. To collect and process accounting data and information by accounting object and work content in accordance with accounting standards and systems;

2. To vouch and trace financial receipts and payments, obligations to collect, pay and settle debts; review management of assets and resources; detect and prevent act and conduct in breach of financial and accounting regulations;

3. To analyze accounting data and information; propose and recommend solutions to meet the accounting entity’s administration requirements and economic and financial decision making;

4. To provide accounting data and information in accordance with the provisions of law.

Article 6. Accounting requirements

1. To fully record financial and economic transactions in accounting vouchers, accounting books and financial statements;

2. To record accounting data and information in an expeditious and timely manner;3. To record accounting data and information in a comprehensive and accurate manner;4. To truly reflect the nature and condition of occurrences and the contents and value of

financial and economic transactions;5. To continuously record accounting data and information of a financial and economic

transaction from beginning to end; and of the accounting entity from the establishment To the termination of its operations. accounting data of a particular period shall be a continuation of those from the prior accounting period;

6. To classify and arrange accounting data and information in an orderly and systematic manner in view of their comparability.

Article 7. Principles of accounting

1. The value of assets is measured at historical cost, which includes the price of purchase, stevedore, transportation, installation, processing work and any directly attributable costs of bringing the assets to working condition for its intended use. The accounting entity is not permitted to re-adjust recorded cost of assets, unless otherwise stipulated by statute.

2. Adopted accounting regulations and methods shall be consistently applied during an annual accounting period. In case of any change in the adopted accounting regulations and methods, a presentation thereof shall be disclosed in the financial statements.

3. The accounting entity shall collect all information on financial and economic transactions that have occurred and reflect them in an objective and accurate manner.

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4. Data and information in the accounting entity’s annual financial statements shall be made public in accordance with Article 32 herein.

5. The accounting entity shall apply a method to value assets and allocate receipts and expenditures in a prudent manner and shall not misstate the results of its financial and economic operations.

6. State agencies, not-for-profit entities and other organizations using funds from the State Budget shall, further to clauses 1, 2, 3, 4 and 5 of this Article, carry out the accounting work as required under the State Budget Index.

Article 8. Accounting standards

1. Accounting standards are underlying accounting principles and methodologies for bookkeeping and financial reporting purposes.

2. The Ministry of Finance shall provide for accounting standards in accordance with International Accounting Standards and the provisions of this Law.

Article 9. Accounting objects

1. Accounting objects of operations with receipts from and payments out of State budget or of non-business nature and those of entities and organizations using funds from the State budget shall include: a. Cash, materials and fixed assets;b. Sources and funds;c. Payments made within and outside the accounting entity;d. Receipts and payments and gap treatment;e. Receipts, payments and balances of State budget; f. State investments and credits;g. Debts and debt treatment by the State;h. National assets; i. Other assets pertaining to the accounting entity.

3. Accounting objects of entities and organizations which do not use funds from the State budget shall include assets and resources defined at points a, b, c, h of clause 1 of this Article.

4. Accounting objects of business activities shall include:a. Fixed assets, current assets;b. Liabilities and owner/shareholder equity;c. Revenue, expenses and other income and expenses;d. Taxes and amounts payable to the State budget; e. Results and appropriation;g. Other assets pertaining to the accounting entity.

5. Accounting objects of banking, credit, insurance, securities and investment activities shall, further to clause 3 of this Article, include:a. Financial investments and credits;b. Payments made within and outside the accounting entity; c. Commitments, pledges, guarantees and other valuable papers.

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Article 10. Financial accounting, managerial accounting, integrated accounting and detailed accounting

1. An accounting entity’s accounting practice is made up with financial accounting and managerial accounting.

2. In handling the work of financial accounting and managerial accounting, an accounting entity shall perform integrated accounting and detailed accounting.a. Integrated accounting is to collect, process, record and provide general information

on the entity’s economic and financial performance. Integrated accounting uses currency units to reflect the position of assets and results of economic and financial performance of the accounting entity.

b. Detailed accounting is to collect, process, record and provide specific information in terms of money, goods and worked time by each accounting object of the accounting entity. Detailed accounting illustrates integrated accounting. Detailed accounting data shall be in uniformity with integrated accounting data for a given accounting period.

3. The Ministry of Finance shall provide guidelines on managerial accounting for each area of business.

Article 11. Measurement units used in accounting

Measurement units used in accounting shall include:

1. Currency unit, being Vietnam Dong (“®” as national symbol, and “VND” as international symbol). Where a transaction arises in a foreign currency, records shall be kept in both the original currency and Vietnam Dong using the actual rate or rate of exchange stated by the State Bank of Vietnam on the transaction date unless otherwise required by statutes. Where no exchange rate is available for a foreign currency in which a transaction arises, the amount shall be translated into another foreign currency having an exchange relation with Vietnam Dong.

For an accounting entity whose revenue and expenses are mainly denominated in foreign currencies, the entity may use a foreign currency recognized by the Ministry of Finance as its reporting currency. However, for its financial statements to be used in Vietnam, the entity shall have to translate the amount so earned and incurred into Vietnam Dong using the exchange rate stated by the State Bank of Vietnam on the financial statement date, unless otherwise stipulated by statutes.

2. The goods unit and worked time unit are official measurement units of the Socialist Republic of Vietnam. Where an accounting entity uses other measurement units, it shall have to convert such units to the official measurement units of the Socialist Republic of Vietnam.

Article 12. Words and numbers used in accounting

1. The writing system used in accounting shall be Vietnamese. Where an accounting entity uses a foreign language for presentation of accounting vouchers, accounting books and

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financial statements in Vietnam, Vietnamese and that foreign language shall concurrently be used.

2. Numbers used in accounting shall be Arabic numerals, being 0, 1, 2, 3, 4, 5, 6, 7, 8, and 9. A stop (.) shall be given after the number showing thousand, million, billion, trillion, thousand trillion, million trillion; a comma (,) shall be given after the number showing unit if it is followed by fraction.

Article 13. Accounting period

1. Accounting periods shall include annual, quarterly and monthly periods, which are defined as follows:a. An annual accounting period is a twelve-month period beginning on 1 January and

ending on 31 December of a calendar year. An accounting entity with special business features may choose to adopt the 12-month period beginning the first day of a quarter and ending the last day of the preceding quarter of the next year and shall keep the financial authorities notified of its choice.

b. A quarterly accounting period is a three-month period beginning on the first day of the first month and ending on the last day of the last month of the quarter.

c. A monthly accounting period is a one-month period, from the first to the last day of the month.

2. The accounting period of new accounting entities is defined as follows:a. For a newly established entity, the first accounting period is from the date of its

business registration certificate to the ending day of the annual, quarterly and monthly accounting periods as prescribed in clause 1 of this article.

b. For other accounting entities, the first accounting period is from the effective date of business set out in the establishment decision to the ending day of the annual, quarterly and monthly accounting periods as prescribed in clause 1 of this article.

3. For an accounting entity subject to business division and separation, merger and combination, transformation, termination, disintegration or bankruptcy, the last accounting period shall be counted from the first day of the annual, quarterly and monthly accounting period as prescribed in clause 1 of this Article to the day before the last effective date set out in the decision on business division and separation, merger and combination, transformation, termination, disintegration or bankruptcy of the accounting entities.

4. Where the first or the last annual accounting period is shorter than 90 days, it shall be added (+) to the subsequent accounting period or added (+) to preceding accounting period to make up an annual accounting period. Accordingly, the first or the last annual accounting period shall have less than 15 months.

Article 14. Prohibited acts and conducts

1. Deliberately falsifying and misstating, or colluding with or forcing others to falsify and misstate, accounting documents.

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2. Deliberately providing and confirming, or colluding with or forcing others to provide or confirm false accounting data and information.

3. Excluding assets belonging to or associated with the accounting entity from the accounting books.

4. Destroying or deliberately damaging accounting documents before the expiry date of the archive term stipulated in Article 40 herein.

5. Issuing and publicizing unauthorized accounting standards and systems.6. Abusing authority and position to pose threat or give pressing-down to accountants

from fulfilling their accounting tasks.7. Taking extra tasks as accountant, warehouse keeper, treasurer or staff selling and selling

assets by those responsible for managing and executing the accounting entity, with the exception of private enterprises, household businesses etc.

8. Appointing to the position of an accountant or chief accountant persons who fail to meet the qualifications stipulated in Articles 50 and 53 herein.

9. Other acts and conducts in accounting which are prohibited by law.

Article 15. Validity of accounting documents and data

1. Accounting documents and data shall be of legal validity concerning the accounting entity’s financial and economic condition, and shall be used for publication in accordance with the provisions of law.

2. Accounting documents and data shall serve as a basis for preparing and approving budget estimates, final accounts and considering and handling violations.

Article 16. Managing, using and providing accounting documents and information

1. The accounting entity shall be responsible for managing, using, maintaining and filing accounting documents.

2. The accounting entity shall be responsible for providing organizations and individuals with accounting information and documents in an adequate, explicit and timely manner in accordance with the provisions of law.

Chapter II

CONTENTS OF ACCOUNTING WORK

Section 1 ACCOUNTING VOUCHERS

Article 17. Content of accounting vouchers

1. An accounting voucher shall have the following contents:a. Name and serial number of the accounting voucher;b. Date (day, month, year) of the accounting voucher;

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c. Name, address of the organization or individual that prepares the accounting voucher;

d. Name, address of the organization or individual that the accounting voucher is addressed;

e. Contents of the financial and economic transaction;f. Quantity, unit price and amount expressed in number of the financial and economic

transaction; the total amount of the accounting voucher used for receipts/payments expressed in numbers and words; and

g. Signatures and full names of the preparer and approver of the accounting voucher and those relating thereto.

2. Apart from the key contents defined in clause 1 of this Article, an accounting voucher may include other contents, depending on the type of vouchers.

Article 18. Electronic vouchers

1. Electronic vouchers shall be considered as accounting vouchers in the event that they are of the same contents defined in Article 17 of this Law, presented in electronic data and coded without being changed when transmitted through the computer network or contained in information carrying objects, such as magnetic tapes, discs and payment cards.

2. The Government shall prescribe electronic vouchers in detail.

Article 19. Preparation of accounting vouchers

1. Accounting vouchers shall be prepared for financial and economic transactions which occur in relation to the accounting entity’s activities. An accounting voucher shall be prepared once for each financial and economic transaction.

2. Accounting vouchers shall be prepared in a comprehensive, accurate and timely manner following the contents tailored in the format. In the absence of such a format from the accounting voucher system, the accounting entity may use a self-made accounting voucher provided it contains all the contents defined in Article 17 of this Law.

3. The contents of a financial and economic transaction shall not be written in abbreviation, altered or suppressed on the accounting voucher; and shall be written in ink with words and numbers being uninterruptedly presented and blanks marked with crossed lines. Suppressed or altered vouchers shall not be valid for payment and recording. Accounting vouchers with contents incorrectly presented shall be made null and void with crossed lines on the face.

4. An accounting voucher shall be prepared in the established number of copies. Where more copies are required for one financial and economic transaction, these copies shall bear the same contents. The customer copy of an accounting voucher prepared by accounting entities specified in points a, b, c and d of clause 1, Article 2 of this Law on transactions with outside organizations and individuals shall bear the seal of the accounting entity.

5. The preparer, approver and other persons giving signatures on the accounting voucher shall be accountable for its contents

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6. An accounting voucher raised in the form of an electronic voucher shall conform to Article 18 of this Law and clauses 1 and 2 of this Article. Electronic vouchers shall be printed out and filed as stipulated in Article 40 herein.

Article 20. Signing accounting vouchers

1. An accounting voucher shall bear all required signatures. These signatures shall be given in ink. Signatures given in red ink and pencil or by stamping shall not be allowed. Signatures by one person on accounting vouchers shall all be uniform.

2. Signatures on accounting vouchers shall be by competent or authorized persons. Signing an accounting voucher before completing its contents shall strictly be prohibited.

3. A payment-related voucher shall be approved by the competent person and signed by the chief accountant or an authorized person before the payment is made. Signatures shall be given on each copy of the payment voucher.

4. An electronic accounting voucher shall contain e-signatures as required by statutes.

Article 21. Sale invoices

1. Organizations or individuals selling goods or rendering services shall issue sale invoices to customers and/or clients. No sales invoice is prepared in the case of retail sales or service rendering at an amount lower than the stipulated level, for which the customer and/or client do not require an invoice. The Government shall define cases of sale and the level of price for which issuing a sales invoice is not required.

2. Organizations or individuals buying goods or acquiring services have the right to request the seller or supplier to issue sale invoices.

3. Sale invoices shall include the following:a. Ready-printed invoices;b. Computer printed invoices;c. Electronic invoices;d. Stamps, coupons, tickets etc with a set price thereon.

4. The Ministry of Finance shall provide for formats, and organize printing and issuance, of sales invoices. An organization or individual who wishes to use self-printed invoices shall acquire prior written consents of competent finance authorities.

5. Organizations or individuals who fail in sending out sales invoices to buyers or issuing sales invoices in accordance with Articles 19 and 20 and clauses 1, 2, 3, and 4 of this Article for goods sold and services rendered shall be dealt with in accordance with the provisions of law.

Article 22. Management and use of accounting vouchers

1. Data and information in accounting vouchers underlie recording in accounting books.2. Accounting vouchers shall be arranged by economic content following a chronological

order and maintained in a safe manner in accordance with provisions of law.3. Only competent State agencies shall have the authority to impound, confiscate or seal

up accounting vouchers. In case of impounding or confiscation, the competent State agencies shall make copies of the vouchers and sign these photocopies and at the same

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time take a minutes indicating the reasons therefor and the number of each type of vouchers impounded, confiscated or sealed up.

4. The competent agency which seals up accounting vouchers shall take a minutes indicating reasons therefor and the number of each type of accounting vouchers sealed up. It shall also sign and seal these minutes.

Section IIACCOUNTS AND ACCOUNTING BOOKS

Article 23. Accounts and chart of accounts

1. Accounts shall be used to classify and systematize business transactions by economic nature.

2. A chart of accounts is made up with accounts necessary for use. Each accounting entity shall use a chart of accounts.

3. The Ministry of Finance shall provide specific regulations on accounts and the system of accounts.

Article 24. Selection and application of a chart of accounts

1. The accounting entity shall rely on the system of accounts provided by the Ministry of Finance to adopt a chart of accounts for use.

3. The accounting entity is permitted to create sub-accounts from the selected accounts for its management purposes.

Article 25. Accounting books and system of accounting books

1. Accounting books are used to record, systematize and file data of all economic and financial transactions arising in relation to the accounting entity.

2. An accounting book shall indicate the name of the accounting entity, the title of the book, the date of book opening and that of book closing. It shall bear the signatures of the person opening the book, the chief accountant and a legal representative of the accounting entity and marginal seals and indicate the number of pages.

3. Accounting books shall have the following contents:a. The date of recording;b. The number and date of the accounting voucher underlying the making of entries in

the accounting bookc. A summary of financial and economic transactions arisen;d. Money’s worth of financial and economic transactions recorded in accounts; ande. Opening balances, occurrences and closing balances.

4. Accounting books are made up with general books and sub-ledgers.5. The Ministry of Finance shall provide detailed regulations on bookkeeping formats,

accounting book system and accounting books.

Article 26. Selection and application of an accounting book system

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1. An accounting entity shall maintain only one accounting book system for an annual accounting period.

2. The accounting entity shall rely on the accounting book system formulated by the Ministry of Finance to select a book system for its own use.

4. The accounting entity is allowed to make in detail the selected accounting books for its accounting purposes.

Article 27. Accounting book opening, recording and closing

1. Accounting books shall be opened at the beginning of an annual accounting period. For a new accounting entity, accounting books shall be opened on the date of establishment.

2. The accounting entity shall record its accounting books from accounting vouchers.3. Accounting books shall be recorded in a comprehensive, adequate and timely manner.

Data and information recorded in accounting books shall be accurate and truthful as disclosed on accounting vouchers.

4. Records shall be kept of financial and economic transactions in a chronological order. Data and information recorded in accounting books of an annual accounting period shall be a continuation of the records of the prior period’s accounting books. Accounting books shall be recorded continually from the date the books are opened to the date they are closed.

5. Data and information shall be recorded in ink without insertions put thereabouts and shall not be overwritten with other information and data; no line shall be left blank between recorded lines in the accounting book; unfilled line or space of an accounting book page shall be crossed; figures shall be totaled and transferred from one page to the next.

6. The accounting entity shall close its accounting books at period end before preparing financial statements and otherwise in accordance with the provisions of law.

7. The accounting entity can keep records either by hand or by computer. In the latter circumstance, the accounting entity shall observe all the regulations on accounting books specified in Article 25 and 26 and clauses 1, 2, 3, 4, and 6 of this Article. Having been closed, computer accounting books shall be printed out and bound into separate books by annual accounting period.

Article 28. Accounting book correction 1. Errors which are found with records kept by hand shall not be suppressed or deleted,

thus to prevent information track from missing. Erroneous figures shall be altered using each of the following ways:a. Rectification recording by drawing a straight line on the error and putting the

correct number or words above it, for which the chief accountant is to sign next to the correction;

b. Negation recording by rewriting the error in red ink or in parentheses and then putting the correct number, for which the chief accountant is to sign next to the correction;

c. Supplementation recording by preparing an additional journal voucher and adding the short amount thereto for sufficiency.

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2. Where errors are found before the annual financial statements are submitted to the competent State agencies, correction shall be made in the accounting books of the reporting year.

3. Where errors are found after the annual financial statements have been submitted to competent State agencies, corrections shall be made in the accounting books of the year in which errors are found, and footnotes shall be made in the accounting books of the year in which errors were committed.

4. Correction to computer accounting books:a. Where errors are found before the annual financial statements are submitted to

competent State agencies, corrections shall be made directly in the computer accounting books of the reporting year.

b. Where errors are found after the annual financial statements have been submitted to competent State agencies, corrections shall be made in the accounting books of the year in which errors are found, and footnotes shall be made in the accounting books of the year in which errors were committed.

c. Correction to computer accounting books is made using the methods defined in point b or c of clause 1 of this Article.

Section III FINANCIAL STATEMENTS

Article 29. Financial statements

1. Financial statements shall be prepared in accordance with accounting standards and systems for combination and presentation of the accounting entity’s financial position and economic performance.

2. The financial statements of an entity having operations with receipts and payments out of State budget or of not-for-profit nature and those of an entity or organization using funds from the State Budget shall include: a. Balance sheet;b. Statement of receipts and expenditures;c. Notes to the financial statements; andd. Other reports as required by statutes.

3. The financial statements of a business entity shall include:a. Balance sheet;b. Income statement;c. Cash flow statement; andd. Notes to the financial statements.

4. The Ministry of Finance shall provide detailed regulations on financial statements for each area of business.

Article 30. Preparation of financial statements

1. The accounting entity shall prepare financial statements by the end of an annual accounting period. Where it is otherwise required by statutes that financial statements be prepared for another accounting period, the accounting entity shall prepare its financial statements for that accounting period.

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2. Preparation of financial statements shall be from the data obtained upon closure of accounting books. The upper-level accounting entity shall prepare combined or consolidated financial statements based on the accounts of all the accounting entities under its control.

3. Financial statements shall be prepared in accordance with the established contents and methods and consistently presented from one accounting period to the next. Where financial statements are presented inconsistently among accounting periods, a note shall be given as to the reasons therefor.

4. Financial statements shall be signed by the preparer, the chief accountant and the legal representative of the accounting entity. Those who sign the financial statements shall be held accountable for the presentation thereof.

Article 31. Timing of financial statement submission

1. The annual financial statements of an accounting entity shall be submitted to the competent State agencies within 90 days from the end of the annual accounting period as required by statutes. The financial statements of an accounting entity using funds from the State Budget shall be prepared in compliance with the State Budget Law.

2. The Government shall set out the due date of financial statement submission for each area of business and management level.

Article 32. Disclosure of financial statements

1. Disclosure of the financial statements of an accounting entity with receipts from and payments out of State budget or of not-for-profit entities and other organizations using funds from the State Budget, and organizations which do not use funds from the State Budget shall be as follows:a. An accounting entity with receipts and payments out of State budget shall disclose

annual final accounts of receipts and payments out of State budget;b. A not-for-profit entity and organization using funds from the State Budget shall

disclose its annual final accounts of receipts from and payments out of State budget and of other financial revenues and expenditures;

c. An organization which does not use funds from the State budget shall disclose its annual final accounts of receipts from and payments out of State budget; and

d. An accounting entity which uses people contributed funds shall disclose the objectives of mobilizing and using such contribution, contributors of the funds, level of mobilized funds, results of using contributed funds and finalization of each item of contribution.

2. Disclosure of the financial statements of a business entity shall covers:a. Position of assets, liabilities and owner/shareholder equity;b. Results of operations;c. Provision and use of funds; andd. Employees’ income

3. An accounting entity’s audited financial statements shall be disclosed with the opinion of the auditing organization attached thereto.

Article 33. Forms and timing of financial statements disclosure

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1. Disclosure of financial statements shall be conducted in the forms that follow:a. Printing;b. Notificationc. Written notice;d. Other forms as may be required by statutes.

2. An accounting entity with receipts and payments out of the State budget shall disclose its annual financial statements within 60 days of the date of competent agencies’ approval.

3. Not-for-profit entities and organizations using funds from the State budget, organizations which do not use funds from the State budget and organizations which use public contribution shall disclose annual financial statements within 30 days from the date they have financial statements certified by competent agencies.

4. A business entity shall disclose annual financial statements within 120 days from the ending day of an annual accounting period.

Article 34. Audit of financial statements

1. The financial statements of an accounting entity to be audited as governed by law shall be audited before being submitted to competent State agencies and publicized.

2. The accounting entity under audit shall comply with all statutory requirements on auditing.

3. An accounting entity’s audited financial statements submitted to competent State agencies according to Article 31 herein shall be accompanied by the audit report.

Section IVACCOUNTING INSPECTION

Article 35. Accounting inspection

An accounting entity shall have its accounting work inspected by State competent agencies but not more than once a year over one subject matter. Only upon decision by a relevant authority level in accordance with the provision of law, shall an inspection be carried out.

Article 36. Contents of accounting inspection

1. An accounting inspection shall cover:a. Performance of the accounting work;b. Organization of the accounting system and status of accountants;c. Management and practice of professional accounting; andd. Compliance with other regulations on accounting.

2. The content of such examination shall be identified in the inspection decision

Article 37. Authority and responsibility of accounting inspectors

1. Before beginning their examination work, accounting inspectors shall present the decision of inspection. The inspectors have the right to request the inspected entity to

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provide accounting documents associated with the contents of accounting inspection and to account for cases when necessary.

2. Upon completion of an inspection, the inspectors shall take minutes on the accounting inspection and furnish the inspected entity with a copy of the minutes. On detecting violations/breaches against the law on accounting, the inspectors shall handle the case within their authority, or refer the documentation to competent State agencies for further actions in accordance with the provisions of law.

3. The chief inspector shall be responsible for conclusions withdrawn from the work of examination.

4. The inspectors shall follow the sequence, nature and timing of the examination work. They are not allowed to interrupt the course of business of or harass the inspected entity.

Article 38. Rights and obligations of the inspected entity

1. The inspected entity shall have the responsibility to: a. Provide the accounting inspectors with accounting documents associated with the

inspection contents and account for the matters raised by the inspectors; andb. Conform to conclusions by the inspectors.

2. The inspected entity shall have the right to: a. Decline inspections that they find unlikely to be carried out within the given

authority and have nature contrary to the provisions set out in Article 36 herein.b. File formal complaints against the conclusion by the accounting inspectors to

agencies in charged with accounting inspections; or choose to conform to the provisions of law where disagreement arises as to the conclusion drawn by the latter.

Section VSTOCKTAKING OF ASSETS,

MAINTENANCE AND FILING OF ACCOUNTING DOCUMENTS

Article 39. Stocktaking

1. Stocktaking is to weigh, measure and count the quantity and assess and confirm the quality and value of assets and resources as of the stocktaking date so that the data therefrom can be verified and reconciled to the accounting records.

2. The accounting entity shall carry out stocktaking:a. by the end of an annual accounting period, before preparation of financial

statements;b. in the event of division and separation, merger and combination, disintegration,

bankruptcy and termination of business or of disposal, acquisition, contracting and leasing of enterprises;

c. when transforming the title of business ownership;d. in case of fire, flood and unforeseen damage;e. when revaluing assets upon decisions by competent authorities; f. in other circumstances as stipulated by law.

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3. Upon completion of stocktaking, the accounting entity shall prepare a summary report of stocktaking results. Where difference exists between the count figures and the records, the accounting entity shall identify the causes and record the difference and treatment thereof in the accounting books before preparing financial statements.

4. Stocktaking shall reflect assets and resources as they are. Those whose prepare and sign the summary report shall be accountable for the results of stocktaking.

Article 40. Maintenance and filling of accounting documents

1. The accounting entity shall maintain and keep accounting documents in a safe and adequate manner during the process of using and filing them.

2. Accounting documents so kept and maintained shall be original copies. Certified photocopies shall be available in the case of impounded or confiscated documents; photocopies or confirmation notes shall also be available and accompanied by minutes taken of lost or damaged documents.

3. Accounting documents shall be kept in achieves in twelve months from the ending day of an annual accounting period or from the date the accounting books are closed.

4. The legal representative of an accounting entity shall be responsible for organizing the archive of accounting documents.

5. Accounting documents shall be archived over the terms specified below:a. At least 5 years for documents used in management and execution of the accounting

entity, including those not directly used for bookkeeping or financial reporting purposes;

b. At least 10 years for documents directly used for bookkeeping and financial reporting purposes, including the accounting books and financial statements for the whole year, except otherwise stipulated by statutes;

g. Eternally kept in archive are accounting documents of historic nature or economy, security and defense significance;

5. The Government shall prescribe the type of accounting books to be archived, terms of achieve, points in time to commence the terms specified in clause 5 of this Article, archive location and archives destroying procedures.

Article 41. Accounting work in case of loss or destruction of accounting books

On finding that accounting documents are lost or destroyed, the accounting entity shall:1. Check, identify, draw minutes on the quantity, condition and cause of the lost or

destroyed accounting documents and keep relevant organizations and individuals and competent State agencies notified thereof.

2. Organize restoration of damaged accounting documents.3. Contact organizations and individuals with whom relevant transactions have been

conducted for copies or confirmation of lost or destroyed accounting documents.4. Count assets to re-establish lost or destroyed accounting documents if documents

relating to such assets cannot be restored in the manner described in clauses 2 and 3 of this Article.

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Section VIACCOUNTING WORK IN CASE OF DIVISION AND SEPARATION, MERGER

AND COMBINATION, TRANSFORMATION, DISINTEGRATION AND TERMINATION OF BUSINESS

Article 42. Accounting work in case of business division

1. An accounting entity divided into new accounting entities shall perform the following tasks:a. to close accounting books, take inventory of assets, quantify accounts payable and

prepare financial statements;b. to divide assets and accounts payable, prepare a hand-over minutes and keep records

thereof according to the minutes; andc. to hand over accounting documents attributable to assets, accounts payable to the

new entities. 2. The new accounting entities shall rely on the hand-over minutes to open and record

accounting books in accordance with the provision of this Law.

Article 43. Accounting work in case of business separation

1. The accounting entity from which part is separated to form a new accounting entity shall perform the following tasks:a. To take inventory of assets and accounts payable of the division portion;b. To hand over assets and accounts payable of the division portion, take a hand-over

minutes and record accounting books according to the minutes; andc. To hand over accounting books attributable to assets and accounts payable to the

new accounting entity. Accounting documents not handed over shall remain with the accounting entity from which a new entity is established in accordance with Article 40 herein.

2. The new accounting entity shall rely on the hand-over minutes to open and record accounting books in accordance with the provisions of this Law.

Article 44. Accounting work in case of business merger

1. The accounting entity merged into a new accounting entity shall perform the following tasks:a. To close accounting books, count assets, quantify accounts payable and prepare

financial statements;b. To hand-over assets and accounts payable, prepare hand-over minutes and keep

records thereof according to the minutes; andc. To hand over all accounting documents to the new accounting entity.

2. The new accounting entity shall perform the following tasks:a. To open and record accounting books relying on the hand-over minutes; andb. To consolidate financial statements of the merged accounting entities into the

financial statements of the new entity.

Article 45. Accounting work in case of business combination

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1. The accounting entity combined to another accounting entity shall perform the following tasks:a. To close accounting books, count assets, quantify accounts payable and prepare

financial statements;b. To hand-over assets and accounts payable, prepare a hand-over minutes and keep

records thereof according to the minutes; andc. To hand over all accounting documents to the entity to which it is combined.

2. The latter entity shall rely on the hand-over minutes to open and record accounting books in accordance with the provisions of this Law.

Article 46. Accounting work in case of ownership transformation 1. The accounting entity whose ownership is transformed shall perform the following

tasks:a. To close accounting books, count assets, quantify accounts payable and prepare

financial statements;b. To hand-over assets and accounts payable, prepare a hand-over minutes and keep

records thereof according to the minutes; andc. To hand over all accounting documents to the new accounting entity.

2. The entity of new ownership form shall rely on the hand-over minutes to open and record accounting books in accordance with the provisions of this Law.

Article 47. Accounting work in case of business disintegration, termination and bankruptcy

1. The accounting entity disintegrated or terminated shall perform the following tasks:a. To close accounting books, count assets, quantify accounts payable and prepare

financial statements;b. To open accounting books to keep track of financial and economic transactions

relating the disintegration and termination of business; andc. To hand-over to upper-level accounting entities, or organizations and individuals

relevant accounting documents for archive in accordance with Article 40 of this Law upon completion of business integration and termination.

2. For an accounting entity declared bankrupt, the court that has made the declaration shall appoint a person(s) to keep the accounts in accordance with clause 1 of this Article.

Chapter III

ORGANIZATION OF AN ACCOUNTING SYSTEM AND ACCOUNTANTS

Article 48. Organization of an accounting system

1. The accounting entity shall organize an accounting system and appoint or hire accountants.

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2. The accounting entity shall appoint the chief accountant. If failing to do so, the accounting entity shall put an accountant in charge of the accounting work or hire a person as chief accountant (the chief accountant and the person in charge of the accounting work are hereinafter referred jointly to as chief accountant).

3. Where an organizations or entity has upper-level and base-level accounting entities, their accounting system shall be organized in accordance with the provisions of law.

Article 49. Responsibility of the accounting entity’s legal representative

1. To organize the accounting system and appoint accountants and chief accountant according to the criteria and requirements prescribed herein.

2. To decide the hiring of accountants and chief accountant.3. To organize and oversee the performance of the entity’s accounting work in accordance

with the law on accounting and assume accountability for the consequence of his/her misconduct and wrong doings.

Article 50. Qualifications, rights and duties of accountants

1. Accountants shall meet the following qualifications:a. To possess professional ethics, integrity and good sense of law; b. To possess qualifications for the accounting profession.

2. Accountants shall be independent in their accounting practice.3. Accountants are required to comply with legal accounting requirements, perform

assigned tasks and take responsibility for their professional qualifications and skills. When there is a change of accountants within an accounting system, the outgoing accountant shall hand over the accounting work and documents to the incoming accountant. Outgoing accountants shall be responsible for the performance of the accounting work during their term of office.

Article 51. Persons who are not allowed to act as accountant

1. Persons whose have yet to come of age, those who have lost or limited civil behavior capacity, those who are at special centers for education or medical treatment and those under administrative surveillance.

2. Persons who are prohibited from accounting practice by the court’s judgement or decision, those who are being investigated for criminal responsibility, those who are serving a term in prison or have had criminal records relating to economic scandals, abused position relating to finance and accounting that have not been rectified or abolished.

3. Parents, spouses, siblings, and children of any of management members (including the chief accountant) working in the accounting entity, which is a State-owned enterprise, joint-stock company, cooperative, State agency, not-for-profit entity, organization which uses funds from the State budget and organization which does not use funds from the State budget.

4. Warehouse keepers, treasurers, personnel in charged of purchasing and selling assets in the accounting entity, which is a State-owned enterprise, joint-stock company,

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cooperative, State agency, not-for-profit entity, organization which uses funds from the State budget and organization which does not use funds from the State budget.

Article 52. Chief accountant

1. The chief accountant shall be responsible for organizing the accounting work of an accounting entity as prescribed in Article 5 herein.

2. Apart from tasks prescribed in clause 1 of this Article, the chief accountant of a State agency, not-for-profit entity, organization which does not use funds from the State Budget and foreign invested enterprise shall also be responsible for assisting the accounting entity’s legal representative to oversee financial matters of the entity.

3. The chief accountant shall be under the leadership of the accounting entity’s legal representative. Where the entity affiliates to another entity, the chief accountant shall also be subject to the oversight and examination by the chief accountant of the upper-level entity in technical terms.

4. Where the accounting entity appoints a person in charge of accounting in place of the chief accountant, the former shall meet the criteria set out in clause 1 of Article 50 of this Law and shall carry out the tasks, responsibilities and rights assumed by the chief accountant.

Article 53. Qualifications and criteria of the chief accountant

1. The chief accountant shall meet the following criteria:a. Having the qualification defined in clause 1 of Article 50 herein;b. Having accounting qualifications of secondary level or higher;c. Having experienced accounting practice for at least 2 years for those who have university degrees or higher in accounting and at least 3 years for those who have secondary qualifications in accounting.

2. The chief accountant holds a certificate indicating that he/she has attended a chief accountant coaching course as required by statutes.

3. The Government shall prescribe qualifications and criteria in detail for chief accountants applicable to the types of accounting entity.

Article 54. Responsibilities and jurisdictions of the chief accountant

1. The chief accountant shall assume the following responsibilities:a. To realize the provisions of law on finance and accounting in the accounting entity;b. To organize and manage the accounting mechanism as stipulated herein; andc. To prepare financial statements.

2. The chief accountant shall be independent in their accounting practice.3. The chief accountant of a State agency, not-for-profit entity and other organizations

using funds from the State Budget and State owned enterprises shall, apart from the jurisdictions prescribed in clause 2 of this article, have the right to:a. Submit to the legal representative of the accounting entity written proposals on

recruitment, transfer, pay rise, rewards and penalties of accountants, storekeepers, treasurers;

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b. Instruct related divisions of the accounting entity to provide documents relating to his/her oversight of accounting and financial work in an adequate and timely manner;

c. Reserve professional judgement in writing against any conflicting opinion of a decision maker;

d. Report in writing to the legal representative of the accounting entity on findings of breaches/violations against financial and accounting regulations; and report to the decision maker’s immediate upper-level authority or authorized State agencies where it has been forced to execute an unjustified decision and take no responsibility for the consequence thereof.

Chapter IV

PRACTICE OF THE ACCOUNTING PROFESSION

Article 55. Professional accounting practice

1. Organizations and individuals eligible by law shall have the right to practice accounting profession.

2. Organizations specialized in the accounting profession are required to establish accounting service businesses in accordance with the law of Vietnam. Management of an accounting service business shall be a holder of accounting practice certificate issued by the competent State agency in accordance with Article 57 herein.

3. Individuals practicing the accounting profession shall hold practice certificates issued by the competent State agency in accordance with Article 57 of this Law and shall register their practice of accounting services.

Article 56. Hiring of accountants and chief accountant

1. An accounting entity can sign contracts with accounting service organizations or individuals who have registered their practice of accounting services to engage the service of accountants or chief accountant in accordance with provisions of law.

2. The service of accountants and chief accountant shall be engaged into written contracts as required by statutes.

3. An accounting entity hiring accountants or chief accountant shall provide full, true and timely information and documents relating to the engagement of accounting services and make payment in full and on time of service fees set out in the contract.

4. Persons who are hired as chief accountant shall be those who satisfy the qualifications and criteria defined in Article 53 herein.

5. Accounting service organizations or individuals and those who are hired as chief accountant shall be responsible for accounting data and information within the scope of work defined in the employment contract.

Article 57. Practice certification

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1. Vietnamese citizens shall be granted accounting practice certificates provided that they meet the following conditions and requirements:a. To possess professional ethics, integrity and a good sense of laws; and not to belong

to the groups of those defined in clause 1, 2 of Article 51 herein;b. To have qualifications in finance and accounting at university level and higher and

to have served five years in the financial and accounting profession; c. To have passed entry examinations held by competent State authorities.

2. For a foreigner to be holder of an accounting practice certificate, he/she shall meet the following conditions and requirements:a. To have resident permit in Vietnam;b. To possess an accounting expert certificate or a accounting practice certificate

issued by an international organization recognized by Vietnam’s Ministry of Finance;

c. To have passed an examination on the laws on Vietnamese economy, finance and accounting held by competent State authorities.

3. The Ministry of Finance shall prescribe preparatory curricula, examination councils, procedures and authority of certification and certificate withdrawal.

Article 58. Rights to join professional accounting associations

The accounting entity and accountants shall have the right to join Vietnam Accounting Association or other professional accounting organizations with a view to developing the accounting career and protecting members’ legal rights and benefits in accordance with provision of law on associations and societies.

Chapter V

STATE MANAGEMENT OF ACCOUNTING

Article 59. Scope of State management of accounting

State management of accounting shall include the following tasks:1. To devise and direct implementation of strategies and plans for development of

accounting;2. To issue, publicize, direct and organize implementation of legal documentation and

legislation on accounting;3. To inspect accounting practice and accounting service activities;4. To provide guidelines on accounting practice, organize examinations and grant and

withdraw accounting practice certificates;5. To provide guidelines on and organize training and coaching courses on accounting

profession;6. To organize and manage researches and studies on accounting and application of

information technology in the profession;7. To maintain international cooperation on accounting; 8. To handle breaches/violations of legal accounting requirements.

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Article 60. State management responsibility for accounting

1. The Government uniformly exercises State management of accounting.2. The Ministry of Finance shall be responsible to the Government in discharging the

function of State management of accounting;3. Ministries and ministerial-level shall, within their authority and jurisdiction, exercise

State management of accounting in the fields and industries to which they are assigned.4. Municipal and provincial People’s Committees shall, within their authority and

jurisdiction, exercise State management of accounting in their respective jurisdictions.

Chapter VI

COMMENDATION AND HANDLING OF VIOLATIONS

Article 61: Commendation

Organizations and individuals having achievements in accounting shall be commended in accordance with the provisions of law.

Article 62. Handling of violations Organizations or individuals violating accounting laws and regulations shall, depending on the nature and severity of the violation, be disciplined, subject to administrative sanctions, or examined for penal liability; if damage is caused, compensation shall be made according to the provisions of law.

Chapter VII

IMPLEMENTATION PROVISIONS

Article 63. Implementation effects

1. This Law shall take effect from 01 February 2004.2. The Ordinance on Accounting and Statistics promulgated on 20 May 1988 shall be null

and void from the date this Law becomes effective.

Article 64. Implementation guidelines

The Government shall make detailed provision and guide the implementation of this Law.

This Law was passed on 17 June 2003 by the 3rd session of the National Assembly of the Socialist Republic of Vietnam, XIth Legislature.

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CHAIRMAN OF THE NATIONAL ASSEMBLYNguyen Van An

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