Decision No. 12/2001/QD-BTC dated March 13, 2001 of the Finance Minister promulgating the accounting regime applicable to non-public units operating in the fields of education, healthcare, culture and sports
THE MINISTRY OF FINANCE
SOCIALIST REPUBLIC OF VIET NAM
Independence - Freedom - Happiness
Hanoi, March 13, 2001
OF OF THE FINANCE MINISTER PROMULGATING THE ACCOUNTING REGIME APPLICABLE TO NON-PUBLIC UNITS OPERATING IN THE FIELDS OF EDUCATION, HEALTHCARE, CULTURE AND SPORTS
THE FINANCE MINISTER
Pursuant to the Government's Decree No. 15/CP of March 2, 1993 on tasks, powers and State management responsibilities of the ministries and ministerial-level agencies;
Pursuant to the Government's Decree No. 178/CP of October 28, 1994 defining the functions, tasks and organizational structure of the Finance Ministry;
Pursuant to the Government's Decree No. 73/1999/ND-CP of August 19, 1999 on the policy to encourage socialization of activities in the fields of education, healthcare, culture and sports;
Pursuant to Joint Circular No. 30/2000/TTLT/BTC-UBTDTT of April 24, 2000 guiding the financial management regime applicable to non-public establishments operating in the field of physical training and sports; Joint Circular No. 31/2000/TTLT/BTC-BYT of April 25, 2000 guiding the establishment and financial management mechanism applicable to non-public medical examination and treatment establishments; Joint Circular No. 32/2000/TTLT/BTC-BVHTT of April 26, 2000 guiding the financial management regime applicable to non-public establishments operating in the field of culture; and Joint Circular No. 44/2000/TTLT/BTC-BGD&DT-BLDTB&XH of May 23, 2000 guiding the financial management regime applicable to non-public establishments operating in the field of education and training;
Pursuant to the non-business and administrative accounting regime promulgated together with the Finance Minister's Decision No. 999-TC/QD-CDKT of November 2, 1996;
At the proposal of the director of the Financial Regime Department,
Article 1: To promulgate the accounting regime applicable to non-public establishments operating in the fields of education, healthcare, culture and sports, consisting of 5 parts:
1. General provisions;
2. System of accounting documents;
3. System of book-keeping accounts;
4. System of accounting books;
5. System of financial statements.
Article 2: The accounting regime applicable to non-public establishments shall apply to semi-public establishments not allocated regular budget funding; people-founded and private establishments operating in the fields of education, healthcare, culture and sports nationwide as from July 1, 2001. Semi-public establishments allocated regular budget funding by the State shall apply the administrative and non-business accounting regime promulgated together with the Finance Minister's Decision No. 999-TC/QD-CDKT of November 2, 1996.
Article 3: The Ministry of Education and Training, the Ministry of Health, the Ministry of Culture and Information, the Committee for Physical Training and Sports and the People’s Committees of the provinces and centrally-run cities shall have to direct and organize the implementation of the accounting regime of non-public units by units under their management.
Article 4: The director of the Accounting Regime Department, the general director of the General Department of Taxation, the director of the Department for Administrative and Non-Business Units and the director of the Ministry's Office shall have to guide and inspect the implementation of this Decision.
ACCOUNTING REGIME APPLICABLE TO NON-PUBLIC ESTABLISHMENTS OPERATING IN THE FIELDS OF EDUCATION, HEALTHCARE, CULTURE AND SPORTS
(Promulgated together with the Finance Minister's Decision No 12/2001/QD-BTC of March 13, 2001)
Chapter I: GENERAL PROVISIONS
Article 1: People-founded, private and semi-public units which are not allocated funding by the State budget and operating in the fields of education, healthcare, culture or sports such as schools, pre-school classes, training centers, clinics, hospitals, sports and physical training clubs, indoors gymnasiums, swimming pools, libraries, museums, etc., (hereinafter referred to as non-public units for short) shall have to organize their accounting activities according to the Ordinance on Accounting and Statistics and this accounting regime. Semi-public units which are allocated funding by the State budget (apart from the State's financial supports from already paid enterprise income tax amounts for investment in infrastructure) shall comply with the administrative and non-business accounting regime promulgated together with the Finance Minister's Decision No. 999/TC-QD-CDKT of November 2, 1996.
Article 2: Accounting tasks of non-public units
1. Gathering and reflecting in an accurate, adequate and timely manner the current figures as well as increase and decrease of their capital and assets, and the situation of collecting fees, service charges, proceeds from sale of products and other revenues, and the situation of spending for professional operations and other operations.
2. Examining the implementation of operation revenue and expenditure estimates, and the management and use of assorted materials, assets and funds, the situation of revenues and expenditures of professional operation and other operations, financial results, and the distribution of operation results, as well as the performance of obligations toward the State.
3. Making and submitting on time financial statements, conducting final settlement according to regulations and assisting their heads in implementing the financial publicity.
Article 3: Accountants of non-public units must apply the "double" accounting method. For some small-sized non-public units (pre-school classes, baby-sitting groups, small-sized clinics, etc.), the finance agency of the level establishing them shall consider to allow the application of the “single” accounting method.
- Accounting activities must use written Vietnamese language and universal numerals.
- Accounting of values must use Vietnam dong as the currency unit for calculating and book-keeping. Foreign-currency amounts shall be recorded in their original foreign currencies and converted into Vietnam dong at the actual exchange rates applicable to the arising economic transactions or the average exchange rate on the inter-bank foreign-currency market announced by the State Bank of Vietnam at the time when the transactions arise.
- Accounting of objects must use the official measurement units of the Vietnamese State (such as unit, piece, kilogram, ton, liter, meter, etc.). In case of necessity, other measurement units may be used for inspection or comparison, or in service of detail accounting.
Article 5: The taking of accounting notes must use unfading ink. Numbers and words must be clear, continuous and systematic. No abbreviation, no insertion, no overlapping writing and no line skip are allowed. Lines left blank or not fully inscribed must be crossed out. Account holders and chief accountants are not allowed to sign blank checks or vouchers. No erasure, no use of chemicals for modification and correction are allowed. In case of necessity to modify or correct, the modification and correction methods provided for in this accounting regime shall be used.
Article 6: The accounting year shall be calculated according to the calendar year, starting from January 1 till the end of December 31. Schools may choose the accounting year according to school year, but must register it with the finance agency and by the end of December 31, they shall still have to close their accounting books, make financial statements according to calendar year then submit them to the finance agency of the level permitting their establishment and the directly-managing tax office.
- Accounting periods in an accounting year shall be:
+ Month: From day 01 to the end of the last day of the month;
+ Quarter: From day 01 of the quarter’s first month to the end of the last day of the quarter.
Article 7: Requirements for non-public units’ accounting activities
- All their assets, capital sources, funds, liabilities, operation revenues and expenditures, and financial results must be reflected in an adequate, accurate and timely manner;
- Accounting norms to be reflected must be in line with the formulation of operation revenue and expenditure plans in terms of content and calculation method;
- Financial statement figures must be clear, comprehensible, capable of supplying all necessary information on their financial status to capital contributors and State management agencies.
- Accounting work in the units must be neatly organized, thus ensuring its efficiency.
Article 8: Accounting works of non-public units have the following contents:
* Accounting of monetary capital: Reflecting current figures, increase and decrease of units' assorted monetary capital, including: cash in funds, deposits at banks and treasuries;
* Accounting of materials and assets:
- Reflecting current quantity and value as well as increase and decrease of each kind of materials and goods at the units;
- Reflecting quantity, original value, worn value and remaining value of each current fixed asset as well as the increase and decrease of each fixed asset; volume and value of capital construction works and fixed asset overhauls of the units.
* Accounting of settlement:
- Reflecting receivable debts and the settlement of receivable debts according to each subject inside or outside the units.
- Reflecting payable debts of the units for purchase of materials or public services which have been used but remained unpaid to the suppliers, loans, remunerations which must be paid to laborers, incomes which must be divided to capital contributors, taxes which must be paid to the State and the settlement of such payable debts.
* Accounting of capital sources and funds: Reflecting current capital sources and funds, as well as increase and decrease of each capital source or fund attributed to members' capital contributions or by deduction from operation results or by supplementation from other capital sources.
* Accounting of revenues: Reflecting operation revenues arising at establishments, such as: school fee, enrollment fee, examination fee, hospital fee, revenues from sale of entrance tickets, revenues from lease of material foundations, training and competition facilities and other collections.
* Accounting of expenditures: Reflecting expenditures on materials, remunerations, asset depreciation, charges for services provided from outside, and monetary expenditures for non-business activities, production and service activities and capital construction investment activities.
* Accounting of financial results and distribution thereof: Reflecting revenue-expenditure difference in the year and distribution thereof.
Article 9: Asset inventory
Non-public units must conduct periodical inventory and unexpected inventory to determine the real figures of the units' materials, assets, capital and liabilities at the time of inventory.
- Periodical inventory: At the end of an accounting year and before making financial statements, units shall have to inventory their materials, assets, funds, make copied lists for acknowledgment and cross-checking of liabilities. If the inventory results are different from the accounting books' figures, such difference must be handled; if their materials, assets or funds are deficient, material liability therefor shall be identified for handling. Basing themselves on opinions on handling the inventory result difference, the accountants shall adjust accounting books to ensure that figures therein are consistent with actual figures.
- Unexpected inventory: The units shall have to conduct unexpected inventory in case of occurrence of natural disasters, fires or their handover, merger, consolidation, separation, division and dissolution and other unexpected events.
Article 10: Accounting inspection
Non-public units must be subject to periodical and unexpected accounting inspection by the finance agencies of the same level and their managing boards.
Accounting inspection means inspection of recording in documents, accounting books and financial statements as well as the inspection of the observance of regulations on finance and accounting.
The heads and chief accountants (or the persons in charge of accounting) of the non-public units shall have to abide by decisions on financial and accounting inspection by competent authorities.
Article 11: Preservation and archival of accounting documents
Accounting documents include accounting vouchers, accounting books, financial statements and other accounting-related documents.
After the end of the accounting year and the completion of all accounting works, accounting documents must be categorized, packed, given ordinal numbers, listed and tightly wrapped for archival for 5 years or 20 years according to the provisions of the State's accounting document archival regime.
Article 12: Accounting works to be handed and taken over at non-public units upon their separation, division, consolidation, merger, dissolution or bankruptcy
1. In cases where non-public units are separated or divided into new units, the following tasks must be performed:
- For the divided units:
+ Closure of accounting books, inventory and revaluation of assets, determination of unpaid debts, and making of financial statements.
+ Division of assets, capital and unpaid debts according to prescribed principles and procedures. On the basis of results thereof, handover written records shall be made. On the basis of handover written records, accounting books' figures shall be wiped out;
+ Accounting documents related to assets and unpaid debts, which have been divided to units, shall be handed over to those units. Accounting documents of divided units which are not handed over shall be archived according to the regime of preservation and archival of accounting documents;
- For the newly established units: On the basis of handover written records, accounting books shall be recorded according to regulations.
2. When two or several non-public units are consolidated into one new unit, the following tasks must be performed:
- Closure of accounting books, inventory and revaluation of assets, determination of unpaid debts, and making of financial statement of each consolidated unit;
- Integration of financial statements of the consolidated units into the financial statement of the consolidating unit;
- Accounting documents of the consolidated units shall be preserved and archived by the new unit;
3. In cases where units have dissolution decisions of the authorities that have issued establishment decisions, they shall have to close their accounting books, inventory and evaluate their assets, determine unpaid debts and make financial statements. After liquidating assets, handling liabilities, collecting and remitting financial liabilities into the State budget under decisions of the competent authorities, they shall wipe out accounting books.
Chapter II: ORGANIZATION OF ACCOUNTING APPARATUS
1. Each non-public unit shall, depending on its size, have to organize an accounting apparatus (a division, a group or designated full-time accountant) and appoint a person in charge of accounting. Non-public units with a relatively large operation scale may appoint chief accountants.
2. Non-public units must arrange persons performing professional finance and accounting works who have been fundamentally trained in accounting and finance and have professional finance and accounting qualifications of intermediate degree or higher. Small-sized non-public units may arrange persons performing accounting works on a part-time basis, who may concurrently hold positions other than cashier.
3. The finance and accounting personnel shall have their right to professional independence ensured according to the provisions of the Ordinance on Accounting and Statistics and this accounting regime.
4. In case of change of accountant, the head of the non-public unit shall have to organize a handover between the outgoing accountant and the incoming accountant. The handover must be recorded in writing, fully stating the unit’s financial status, including assets, capital, liabilities, capital sources, revenues and expenditures, etc., accounting documents and incomplete works. The unit head must sign to certify the written record of handover The incoming accountant shall be responsible for his/her job as from the date of takeover, while the outgoing accountant shall still be responsible for his/her job during the time he/she was in charge.
Article 14: The chief accountant or the person in charge of accounting shall have the function of assisting the unit head in instructing and organizing the performance of all finance and accounting works as well as economic and financial information within the unit, and inspecting and controlling the observance of the State's finance and accounting regimes and policies by the unit.
The chief accountant or the person in charge of accounting shall submit to the personal direction by the unit head, and at the same time submit to the professional instruction and inspection in finance and accounting by the finance agency.
The appointment, dismissal, transfer to other jobs or disciplining of the chief accountant or the person in charge of accounting shall be decided by the head or the management board of the non-public establishment.
Article 15: The person appointed to the position of chief accountant or person in charge of accounting must fully have the following qualifications:
1. Being incorruptible and honest, having the sense of observing the State's economic-financial policies and regimes and law.
2. Possessing good professional qualifications in finance and accounting (finance-accounting training diplomas of intermediate level or higher) and having worked in the finance and accounting domain, and having capability to organize, direct and administer finance and accounting work in their units.
Persons who have breached disciplines, committed violations of embezzlement or property misappropriation or violated the finance and accounting policies must not be appointed to the position of chief accountant or person in charge of accounting.
Article 16: The persons in charge of accounting shall have the following tasks:
1. To organize accounting works and accounting apparatus suited to operation characteristics and management requirements and level of units in order to perform accounting tasks prescribed in Article 3 of this regime.
2. To inspect and control the management and use of materials, assets, capital, funds and the observance of standards and norms of the State and their units.
3. To archive accounting documents and guide financial and accounting policies and regimes within their units.
Article 17: All persons in units who are related to accounting work must strictly observe the accounting and financial principles, regimes and procedures; shall have to provide fully and in time all vouchers and documents necessary for accounting work and take responsibility for accuracy, truthfulness, lawfulness and validity of such vouchers and documents.
Article 18: Handling of violations
1. All acts of violating the Ordinance on Accounting and Statistics and the provisions of this accounting regime shall, depending on their nature, content and seriousness, be sanctioned according to regulations on sanctioning of administrative violations in the accounting domain.
2. If violation acts cause serious consequences, violators may be examined for penal liability according to the Penal Code.
Chapter III: ACCOUNTING DOCUMENTS
Article 19: For all arising economic operations related to economic and financial activities of units, accounting documents must be made. All data recorded in accounting books must be evidenced by lawful and valid accounting documents:
- Lawful accounting documents: Are those made strictly according to prescribed compulsory forms or instructive forms. The recording of documents must be true to the content and nature of arising economic operations, which must be compliant with law provisions, have signatures of the persons who make, approve and implement them and be affixed with seals of the units according to specific regulations on each type of document;
- Valid accounting documents are those fully recorded with all elements and made according to the method and procedures prescribed for each kind of document.
An accounting document must be made only once with sufficient originals, true to realities as well as time and place when and where economic operation arises. In cases where documents are improperly printed, have insufficient originals or are wrongly inscribed, they must be revoked by crossing out all their originals, which are, however, not allowed to be torn off from their counterfoils.
Article 20: An accounting document made by the unit or received from another unit must fully have the following elements:
- Day, month, year of making document, serial number of document;
- Name and address of the place where the document is made;
- Name of the document: collection bill, spending bill, advance request, etc.;
- Name and address of the unit or individual to receive the document;
- Summarized content of arising economic operation;
- Norms on quantity and value (name, label, specification, quality, quantity, unit price, total money amount), and the amount in numerals and in words;
- Signatures of the document maker and the person responsible for accuracy and truthfulness of the economic operation reflected on the document, and seal of the unit according to regulations on each kind of document.
For small procurements or spendings, if sellers do not issue invoices, purchasers shall have to make “Lists of procurements,” clearly stating full names and addresses of the sellers, names and quantities of purchased goods and services and actually paid money amounts. Then accountants shall examine, certify and submit such lists of procurements to the heads of units for signing for approval, before they are considered valid.
For documents related to collection of school fee, enrollment fee, exam fee, hospital fee, and entrance tickets, sale of products or goods, invoices or receipts of collection of fees or ticket money supplied by the finance agency or printed by units themselves must be used. Self-printing of invoices and receipts must be approved in writing by the finance agency and comply with the invoice issuance and use management regulations of the Finance Ministry (the General Department of Taxation).
Article 21: The following acts are strictly prohibited:
- Collecting school fee, hospital fee, different kinds of fee and service charge without making documents and handing receipts to payers;
- Paying out or encashing; warehousing or ex-warehousing materials; or liquidating, assigning, selling, handing over fixed assets without lawful and valid documents;
- Forging accounting documents to embezzle funds or evade taxes;
- Legalizing accounting documents;
- Account holders and chief accountants (or persons in charge of accounting) give their signatures in advance on blank checks or documents;
- Distorting or deliberately deflecting contents and nature of arising economic or financial operations;
- Modifying or erasing accounting documents;
- Destroying documents in contravention of regulations or in the prescribed archival duration;
- Using invalid document forms.
Article 22: Order of handling accounting documents
- All accounting documents made by units themselves or received from outside must be concentrated at the accounting divisions. Accounting divisions must check such documents and shall use them in recording accounting books only after checking and verifying their truthfulness.
- Classifying, arranging, preserving and archiving accounting documents.
Accounting documents made not according to procedures, with improper contents or unclear figures or words must be returned by accountants to the makers for remaking, amendment or supplementation before being used as basis for recording accounting books.
Article 23: All cases of loss or damage of documents must be reported to the heads of units for timely remedies. Particularly for the loss of receipts, sale invoices, tickets or checks, serial numbers and quantity of lost copies as well as circumstances in which they are lost must be notified to the finance agency and local polices for remedies and verification according to law provisions, and at the same time for prompt application of measures to notify the loss and invalidate lost documents, thus avoiding their misuse.
Article 24: The system of accounting documents applicable to non-public units consists of 28 documents, divided according to the following 4 norms: Labor and salary; materials; money; fixed assets (the List, forms and explanations of contents and method of recording accounting documents are prescribed in the second part).
Chapter IV: BOOK-KEEPING ACCOUNTS
Article 25: Non-public units shall base themselves on the system of book-keeping accounts prescribed in this regime to draw up the list of grade-I and grade-II accounts compatible with their own characteristics and management requirements. To serve management requirements, units may additionally open grade-III accounts (four-digit accounts).
Additional opening of grade-I accounts must be approved in writing by the Finance Ministry.
Article 26: The system of book-keeping accounts applicable to non-public units consists of 24 in-sheet accounts of 6 categories, and 7 off-sheet accounts (the list and explanation of the method of recording the system of book-keeping accounts are prescribed in the third part).
Chapter V: ACCOUNTING BOOKS AND ACCOUNTING MODES
Article 27: Non-public units must open accounting books according to the set forms to record arising economic operations and archive all accounting data to serve as basis for making financial statements.
Accounting books applicable to non-public units are in two systems:
- The system of accounting books applicable to large-sized units, which apply the "double" accounting method.
- The system of accounting books applicable to small-sized units, which apply the "single" accounting method.
Article 28: The system of accounting books by the "double" accounting method consists of:
1. Diary: which is used to synthetically record arising economic operations according to chronological order and composed of the following elements:
+ Day, month of diary recording;
+ Serial numbers and date of accounting documents recorded in diary;
+ Summarized contents of arising economic operations;
+ Money amounts.
2. Ledger: which is used to record arising economic and financial operations according to their economic contents (by book-keeping accounts). Figures in ledger generally reflect the situation of assets and capital sources and the use of materials, assets, funds, liabilities, non-business revenues and expenditures, etc.
Ledger is composed of the following elements:
+ Day and month of recording;
+ Serial numbers and dates of documents recorded in ledger;
+ Principal contents of arising economic operations;
+ Money amounts involved in economic operations arising according to each economic content (record to the debit and credit sides of accounts);
3. Detailed accounting books and cards: which are used to reflect in detail each arising economic operation according to each specific accounting subject not yet reflected in ledger or diary-ledger. Figures on detailed accounting books are used to reflect in detail non-business revenues and expenditures, revenues and expenditures of cash fund, deposits, liabilities of units according to management requirements.
A detailed accounting book is composed of the following elements:
+ Name of book;
+ Name of grade-I or grade-II account;
+ Day and month of book recording;
+ Serial numbers and date of documents;
+ Summarized content of economic operation;
+ Money amounts of norms which must be managed;
+ Other norms appropriate to each book form, depending on management requirements and cost-accounting requirements.
Article 29: Units must base themselves on the norms prescribed in the system of reports on settlement of operation revenues and expenditures, the system of book-keeping accounts and their own management requirements to open all required accounting books as prescribed in this regime. Each unit shall only be allowed to open and keep an official and sole system of accounting books.
It is strictly prohibited to put outside accounting books any revenues, expenditures, kinds of asset, funds, liabilities or financial aids of organizations and individuals.
Article 30: Accounting books must use pre-printed forms and be bound together in volumes
Before using an accounting book, the following procedures must be completed:
- Front cover and first page of the book (on the top left corner) must be inscribed with the name of the managing agency and the name of the unit. The middle of the front cover shall be inscribed with the book's name, date of book opening, accounting year, full name of book keeper, date of last book-recording or date of handover to another person. The head and chief accountant (or the person in charge of accounting) of the unit must sign for certification on the top of pages of the accounting book;
- The book must be paginated and the unit's seal must be affixed on adjoining page edge.
Accounting books shall be considered valid and lawful only after the above procedures are completed.
Article 31: Computerized recording of accounting books
Computerized accounting books must fully show the norms prescribed for each book form. At the end of each accounting period (month, quarter, year), after completing the book closure for each type of book, accountants must print on paper all general accounting books and detailed accounting books, then bind them together in volumes, sign and affix certification seals as for hand-made books.
Article 32: Forms of accounting books
Non-public units applying the "double" accounting method may choose one of the following three accounting book forms:
- Diary – ledger;
- Book-entry document;
- General diary.
Article 33: Modifications and correction in accounting books
Errors made in the course of recording accounting books must be corrected as follows:
1. Method of rectification: This method is used to rectify by crossing with red-ink lines the wrong inscriptions, so that their contents can be seen clearly. Above the crossed inscriptions, the right figures and words shall be inscribed in ordinary ink. Signatures of chief accountants or persons in charge of accounting must be put near the rectified inscriptions.
This method is applied to the following cases:
- Errors are made in explanations, irrelevant to reciprocity of accounts;
- Errors do not affect the total amount.
2. Method of negative inscription: This method is used to correct wrong inscriptions by re-writing in red ink wrong entries to cancel them, then inscribing right entries in ordinary ink.
This method is applied to the following cases:
- Errors are made in reciprocity among accounts due to wrong identification of accounts already recorded in accounting books, which cannot be corrected by the rectification method;
- Errors are detected after settlement reports have been sent;
- Money amounts recorded in books are larger than real figures.
When applying the negative inscription method to correct wrong figures, a "book-entry document on correction" must be made with certification signature of the chief accountant or the person in charge of accounting .
3. Method of supplementary inscription: This method is applied to cases where book entries are made correctly about reciprocity among accounts but money amounts recorded in books are smaller than those stated in documents or some amounts stated in documents are omitted when making aggregation. Correction by this method requires a "book-entry document" on correction with certification signature of the chief accountant or the person in charge of accounting. Subsequently, accountants shall additionally inscribe the deficient amount to correct the wrong figures.
Article 34: Errors made in the course of computerized recording of accounting books may be corrected by one of the above-said methods, but the following regulations must be complied with:
+ If errors are detected when books are not printed yet, they may be corrected right on the computers;
+ If errors are detected after books have been printed, such books shall be corrected by one of the above-said three methods, and at the same time such errors must be corrected on computers and erroneous book pages must be reprinted. Erroneous pages and reprinted pages must be kept together for purpose of checking and control.
Article 35: When annual settlement reports are examined or when the inspection, examination and auditing are completed with official conclusions, if figures in financial statements related to those recorded in accounting books are decided to be corrected, the units shall have to correct accounting books by the methods of accounting book correction and adjust balances of relevant book-keeping accounts. Depending on specific cases, the correction of figures may be made directly on accounting books of reporting year or accounting books of current year (the time when operation arises). For case of correction of figures on current year's accounting books, notes must also be written in the last page (the last line) of preceding year's accounting books for purpose of cross-check and inspection.
Article 36: Closure of accounting books
Closure of accounting books means the summing up of books to calculate total amounts on debit side and credit side and period-end balance of each book-keeping account or total amounts of revenues, expenditures and fund remainders.
At the end of an accounting period (end of month or quarter) and the end of an accounting year, after fully recording all documents arising in the period in accounting books, such accounting books must be closed. Particularly, cash fund books must be closed at the end of every day. Besides, accounting books shall be closed in case of unexpected inventory.
Article 37: Order of closing books at the end of a month
Step 1: Checking and cross-checking
- At the end of an accounting period, after fully recording all accounting documents arising in the period in accounting books, cross-checking must be made between figures in documents with those recorded in books and between figures in inter-related books so as to ensure their consistency.
To sum up figures in the ledger or diary-ledger and detailed accounting books.
- On the basis of books and detailed accounting cards, to make a detailed sum-up table of accounts which must be recorded in many books or many book pages.
- To aggregate all debit figures and credit figures of accounts in the diary-ledger or the ledger, and see whether the aggregated figures are consistent with each other and consistent with figures in the register of book-entry documents or in the column of total amount of the diary or not. Then, to cross-check figures in the ledger with those in detailed books or the detailed sum-up table, between figures of accountants with those of cashiers. If they are consistent, to officially close books. In case of difference, reasons therefor must be identified and such difference must be handled till figures become consistent.
Step 2: Order of book closure:
- To draw a landscape line under and half a line space from the line inscribed with the last operation of the accounting period. Subsequently, to inscribe figures arising in the month already added up under the drawn line;
- To inscribe once again the figures sum up from amounts accumulated in previous months (accumulated from the beginning of the quarter or the beginning of the year till the end of the preceding month) in the line next to the line of sum-up figures arising in the month;
- To inscribe in the next line figures accumulated from the beginning of the year or the beginning of the quarter till the end of the current month;
- To inscribe in the next line the month-end balance.
* Month-end balance shall be calculated as follows:
Increase in the month
Decrease in the month
- To draw two parallel lines (====) closely under the line of balance to conclude the book closure;
- Particularly for some detailed books consisting of columns of debit amounts, credit amounts and balances (or warehousing, ex-warehousing, in-stock, revenues, expenditures, fund remainder, etc.) the figures in the balance column (remainder or in-stock) shall not be inscribed in the total amount line but shall be inscribed in the "month-end balance" line under the total amount line.
After closing accounting books, book keepers shall have to sign below two drawn lines and the chief accountants or the persons in charge of accounting shall inspect to ensure the accuracy and balance, and sign for certification, then submit them to heads of units for inspection and signatures to approve and certify the legality of book-closure figures, thus ensuring the agreement regarding book-closure figures between accountants and heads of units, and finally complete the book closure.
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