Circular No. 53/2016/TT-BTC (“Circular 53”) dated 21st March 2016 issued by the Ministry of Finance amending and supplementing some articles of circular No. 200/2014/TT-BTC dated 22nd December 2014 issued by the Ministry of Finance providing guidance on enterprise accounting system (“Circular 200”). Circular 53 takes effect from its signing date for promulgation and applies to the financial year starting on or after 1st January 2016. However, enterprises may choose to apply the exchange rates specified in this Circular for the preparation of the financial statements for the period 2015. Key changes of Circular 200 are summarized as below:
1. Cost of “Held-for-trading securities”
a) Principles for determining cost
When liquidating or transferring trading securities (according to every type of security), besides weighted average method, Circular 53 also allows to use first-in, first-out method to determine cost of held-for-trading securities (amended point g, clause 1, article 15 of Circular 200).
b) Consistency principle and Note to the Financial statements
Enterprises must consistently apply the selected method to calculate cost price of trading securities in the fiscal year. In case of change of the calculation method of the cost price of trading securities, enterprises must present and interpret according to the provisions of accounting standards.
2. Principles for determining exchange rates
Clause 1.3, article 69 regarding to determining exchange rate when accounting transactions in foreign currencies and revaluation of monetary balances denominated in foreign currencies and clause 4.1, article 69 regarding to accounting for foreign exchange rate differences were supplemented as follows:
a) Actual exchange rates applied to foreign currency transactions occurred during the period
Besides actual exchange rate applied for foreign currency transactions, Circular 53 also allows enterprises to use the approximate exchange rate which is the exchange rate approximate to the average buying/selling transfer rate of commercial banks where enterprises regularly conduct transactions. The approximate exchange rate must ensure that it does not exceed +/-1% from the average buying/selling transfer rate.
The average transfer buying/selling rate is determined daily, weekly or monthly or determined on the basis of the average of daily buying rate and daily selling transfer rate of commercial banks.
In addition, Circular 53 also noted that the use of approximate exchange rate must ensure that it does not affect severely the financial situation and business result of the accounting period.
b) Actual exchange rates upon revaluating monetary balances denominated in foreign currencies at the balance sheet date
In case enterprises apply the approximate exchange rate for recording foreign currency transactions occurred during the period, enterprises shall apply transfer rates of commercial banks where they regularly conduct transactions in order to revaluate monetary balances denominated in foreign currencies at the end of the accounting period.
Such transfer rate may be either buying rate or selling rate or the average buying/selling transfer rate of commercial banks where the enterprise regularly conduct transactions.
c) Appling actual exchange rate in some specific transactions
The phrases "moving weighted average exchange rate" or "weighted average accounting rate" are replaced by "moving weighted average exchange rate or actual exchange rate" in the following transactions:
- The credit side of cash accounts when making a payment in foreign currency;
- The credit side of accounts receivable (except for the transaction of which money is received in advance); the debit side of accounts receivable at the time of final settlement of the sum received in advance due to the transfer of products, commodities, fixed assets, provision of service, volume accepted; the credit side of deposited accounts, prepaid expenses; and
- The debit side of accounts payable (excluding transaction prepaid to the seller); The credit side of account payable at the time of final settlement for cash advanced to sellers due to receipt of products, commodities, fixed assets, services, volume acceptance.
d) Consistency principle and Note to Financial statements
The enterprise should give a clear explanation of the selection and application of exchange rate on the financial statements presentations and such selection and application of exchange rate must follow the consistency principle in accordance with the accounting standards.
3. Translating the accounting documents into Vietnamese
Article 120 was supplemented that the documents attached to the accounting documents such as contract, dossier with attached payment documents, dossier of investment project, finalization report and other relevant documents shall not have to be translated into Vietnamese, unless they are required by competent state authorities.